Budget minister Valérie Pécresse told parliament on Tuesday that the French budget deficit for 2011 would "probably be less than 5.5 percent."

"/> Budget minister Valérie Pécresse told parliament on Tuesday that the French budget deficit for 2011 would "probably be less than 5.5 percent."

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ECONOMY

Deficit to fall below 5.5 percent in 2011: minister

Budget minister Valérie Pécresse told parliament on Tuesday that the French budget deficit for 2011 would "probably be less than 5.5 percent."

Deficit to fall below 5.5 percent in 2011: minister
Budget minister Valérie Pécresse by Marie-Lan Nguyen

The total figure for the 2011 deficit is now expected to be €90.8 billion ($118 billion), a drop of €4.6 billion on the last estimate.

If her prediction is right, the official figure would be lower than the most recent predictions of 5.7 percent and would signal optimism in the government’s deficit cutting programme.

France hopes to reduce its deficit to 4.5 percent in 2012 and then 3 percent in 2013, with plans to balance the budget by 2016.

To reach these targets a total of €65 billion ($85 billion) of cuts and tax rises have been planned through 2015.

“These good results bear witness to the rigour, sincerity and responsiveness with which the government is managing the public finances,” said the minister.

The International Monetary Fund reported some less optimistic figures about France’s deficit cutting programme on Tuesday, reported business daily Les Echos.

The IMF predicts the deficit will fall to 4.8 percent in 2012 and then to 4.4 percent in 2013, higher than the 4.5 percent and 3 percent predicted by the government.

The IMF also expects growth to slow to just 0.2 percent in 2012 before increasing to 1 percent in 2013.

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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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