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FINANCE

Pecresse: France will not waver on deficit

France is sticking to its target of reducing its public deficit to 4.6 percent of GDP next year and is ready to do everything necessary to achieve that goal, Budget Minister Valerie Pecresse said Tuesday.

“We will not deviate by one iota from our target of improving our public finances,” she told RTL radio.

The French deficit currently stands at 5.7 percent of gross domestic product and the government has vowed to reduce it to 4.6 percent of GDP next year and to 3 percent in 2013.

Pecresse said that if extra efforts were needed to reach the 4.6 percent target, then “we will make extra efforts.”

The International Monetary Fund said late last month that France would probably need extra action to cut its public deficit in 2012 and 2013 as falling growth threatened to complicate economic recovery.

It said that without further efforts France was set for a public deficit of 3.8 percent of output in 2013, above both the EU three-percent limit and France’s forecast.

The IMF forecast that growth in France, the eurozone’s second-biggest economy, would slow in 2012 to 1.9 percent from 2.1 percent this year. This was sharply lower than the French government’s 2012 forecast of 2.25 percent growth.

ECONOMY

Sweden’s new right-wing govt slashes development aid

Sweden, one of the world's biggest international donors, is planning drastic aid cuts in the coming years, the country's new right-wing government said in its budget bill presented on Tuesday.

Sweden's new right-wing govt slashes development aid

Prime Minister Ulf Kristersson’s government said it planned to reduce the country’s international aid by 7.3 billion kronor ($673 million) in 2023, and by another 2.2 billion kronor in 2024.

That is around a 15-percent reduction from what had been planned by the previous left-wing government and means Sweden will abandon its foreign aid target of 1 percent of gross national income.

International aid for refugees will be capped at a maximum of eight percent of its aid, and will also be reduced.

According to the specialised site Donor Tracker, Sweden was the world’s eighth-biggest international aid donor in terms of absolute value last year, and the third-biggest in proportion to the size of its economy, donating 0.92 percent of its gross national income, behind Luxembourg and Norway.

The new government, which is backed for the first time by the anti-immigration Sweden Democrats, had announced in its government programme last month that it would be cutting foreign aid.

Since 1975, Stockholm has gone further than the UN’s recommendation of donating at least 0.7 percent of its wealth to development aid.

Despite its growth forecast being revised downwards — the economy is expected to shrink by 0.4 percent next year and grow by 2 percent in 2024 — the 2023 budget forecasts a surplus of 0.7 percent of gross domestic product.

It calls for an additional 40 billion kronor in spending, with rising envelopes for crime fighting and the building of new nuclear reactors, as well as a reduction in taxes on petrol and an increase in the defence budget.

The new government is a minority coalition made up of Kristersson’s conservative Moderates, the Christian Democrats and the Liberal party, backed in parliament by their key ally the Sweden Democrats to give them a majority.

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