Government Revokes €3.1 Billion in Loans Allotted for Ecology, Economy, and Academic Research and Higher Education
The government swung into action on Saturday, April 26, making a splash in the Official Journal (JO) by scrapping over 3 billion euros in credits, as part of an additional 5 billion euro plan announced by Bercy in early April.
Amélie de Montchalin, the minister in charge of public accounts, had earlier articulated that these 5 billion euros were essential for hitting this year's public deficit targets in a world teetering on instability. In a fiery statement, she declared, "These 5 billion euros we're axing, postponing, or redirecting, is our response to a chaotic world. It's our strategy for dealing with whatever life throws at us in this volatile landscape."
A chunk of this overhaul has been set in motion through the decree published in the JO. "To avert a worsening of the budgetary balance on the State's budget," states the decree, "the present decree authorizes the cancellation of credits amounting to 3.1 billion euros in expenditure authorizations." As it stands, "these cancellations should not significantly undermine the capacity for executing public policies as agreed in the initial finance law for 2025," according to the JO. "These cancellations primarily involve credits outside the wage mass that were set aside at the beginning of the year," it adds.
"Walking the tightrope on public accounts recovery"
The ax is falling on a variety of sectors in this revamp. The "mission ecology, development, and sustainable mobility" (549.6 million euros), the "mission economy" (517.7 million euros), the "mission research and higher education" (493.3 million euros) and the "mission agriculture, food, and rural affairs" (140 million euros) are all under the axe.
It's worth checking out our reserved articles "The Bank of France lowers its growth forecast to 0.7% for 2025" and "What is finally in the State's budget for 2025". According to the decree, "the recent deterioration in macroeconomic prospects leads to anticipating lower public revenues, notably linked to a revision of the growth forecast to 0.7%. Such risks are also amplified by the uncertain geopolitical context". "In this cutthroat circumstance, an additional effort in spending control is necessary to honor the trajectory for recovering public accounts, a commitment the government has made," it continues.
Furthermore, it's essential to note that the specific breakdown of the 3.1 billion euros in expenditure authorizations cancelled in France's 2025 budget remains undisclosed in the provided documents. However, some contextual insights include:
- Budgetary Context: The French budget for 2025 is based on its budget law and multi-annual programming (2023-2027). Concerns about public debt sustainability have surfaced in France and other Eurozone countries, indicating an emphasis on fiscal consolidation.
- Likely Focus Areas: While not explicitly named, expenditure cuts in France often target social spending reforms, subsidy reductions, operational efficiencies, and capital expenditure postponements.
- Debt-Driven Priorities: Excessive debt is linked to lower productivity growth and unemployment, implying that cancelled authorizations may prioritize debt reduction over expansionary policies.
Official budget documents from France’s Ministry of Finance would provide precise details about the 3.1 billion euros, but these are not included in the provided sources. The IMF and Eurofi analyses offer valuable context on these measures and broader fiscal sustainability efforts.
- The budgetary decision to cancel 3.1 billion euros in expenditure authorizations is part of an attempt to honor the trajectory for recovering public accounts, as declared in the Official Journal.
- The Minister of Education and Self-Development, Amélie de Montchalin, has articulated that this move is essential for hitting this year's public deficit targets, given the world's instability.
- This budgetary overhaul has impacted sectors such as ecology, development, and sustainable mobility, economy, research and higher education, and agriculture, food, and rural affairs.
- The business and finance sectors should be aware of recent changes in the geopolitical context, given its potential impact on public revenue and the need for spending control due to ongoing concerns about public debt sustainability.
