Unrealistic Fiscal Targets: France’s Deviations from Fiscal Targets
Philippe Dessertine, a renowned expert in public finance, has expressed his concerns regarding France’s significant deviations from its fiscal targets.
In a recent interview with Le Figaro, Dessertine, who holds teaching positions at IAE de Paris and Université Paris 1 Panthéon-Sorbonne, and serves as the director of the Institute of High Finance in Paris, highlighted the persistent gap between the government’s projected and actual budget deficits.
According to Dessertine, the projected public deficit for 2024 is approximately 6% of GDP, a worrying 1.6 percentage points higher than the government’s initial forecast. This substantial deviation has sparked an inquiry within the French National Assembly to investigate the underlying causes.
Dessertine attributes this fiscal drift to a common practice among politicians: the "voluntarist" approach to public finances. This approach, he explains, is characterized by an overly optimistic outlook and a tendency to prioritize favorable projections. Consequently, budgets are often presented with inflated forecasts for economic growth, employment, and inflation.
Such an approach, Dessertine argues, undermines fiscal discipline and leads to unrealistic expectations. It creates a false sense of fiscal leeway, allowing governments to postpone necessary reforms and accumulate unsustainable levels of debt.
The "voluntarist" approach also hinders effective budget planning and decision-making. When targets are set unrealistically high, policymakers are forced to make sharp adjustments later on, potentially leading to abrupt policy changes and economic instability.
Dessertine emphasizes the importance of adopting a more realistic and responsible approach to public finance. This requires setting realistic targets based on credible economic forecasts, prioritizing long-term sustainability over short-term expediency, and implementing sound fiscal policies that promote economic growth without compromising fiscal integrity.
The current inquiry into France’s fiscal deviations provides an opportunity to address these issues and establish a more transparent and accountable framework for public finance management. By learning from past mistakes and adopting evidence-based budgeting practices, France can strive to achieve a more balanced and sustainable fiscal path.
Key Takeaways:
- France’s projected deficit for 2024 is 6% of GDP, 1.6% higher than initially forecasted.
- A "voluntarist" approach to public finance, characterized by overly optimistic projections, has contributed to the fiscal drift.
- This approach undermines fiscal discipline, hampers effective budget planning, and leads to unsustainable debt accumulation.
- A more realistic and responsible approach to public finance is crucial for achieving long-term fiscal sustainability.
- The ongoing inquiry into France’s fiscal deviations can contribute to reforming public finance management practices and fostering greater transparency and accountability.
