While the public deficit stability program by 2027 is presented today to the Council of Ministers, the High Council of Public Finances (HCFP) judged, this Wednesday, April 17, that this new trajectory proposed by the government, which aims to return below 3% of GDP in 2027, lacked “credibility” and “coherence”.
The new stability program, or “PSTAB”, provides for a reduction in the deficit to 5.1% in 2024, 4.1% in 2025, 3.6% in 2026 and finally 2.9% in 2027. Such a trajectory ” would imply a massive structural adjustment between 2023 and 2027 (2.2 points of GDP over four years)” which “would be essentially based on an effort to save on spending”, explains the institution.
“The High Council considers that this forecast lacks credibility”, among other things because the documentation of this effort “never carried out in the past” remains “at this stage incomplete”, and that it “also lacks consistency”, particularly on the growth forecasts. But also because “its achievement presupposes the establishment of rigorous governance, involving all the actors concerned (the State, local authorities and social security), which is not present today”, sets out the opinion.
Growth forecast remains “optimistic”
For 2024, the HCFP estimates that the government’s growth forecast, revised downward in February to 1% compared to 1.4% previously, “remains optimistic”, “even if it is not out of reach”.
But more generally, “the GDP trajectory” retained in government forecasts for the period 2024-2027 “is overestimated”, estimates the HCFP. “There is therefore a significant risk that the government’s assessment of potential GDP will subsequently be revised downwards, and therefore that the structural part of the deficit will be revised upwards,” he warns.