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Paris, 21 February 2022
On 23 February at 11:00 a.m., the Finance Committee, the General Economy and
Budget Oversight, chaired by
Mr Éric Woerth
, will question Mr Pierre Moscovici, First
President of the Court of Accounts, on the audit report requested of the Court, pursuant to
Article 58 (2) of the Constitutional Bylaw on Budget Acts,
on public debt administration and
the efficiency of Central Government funding by Agence France Trésor (AFT)
Created on 8 February 2001, AFT is responsible for Central Government debt
administration. It has three objectives: the issue of securities (governed each year by the
Budget Act), the minimisation of the cost of these issues and the management of the related
risks. Although its robust strategy enabled it to cope with the increase in net borrowing
during the health crisis, the Court of Accounts invites AFT to strengthen its strategic analysis
in the face of the emergence of new challenges (such as the gradual withdrawal from
Eurosystem purchases), to communicate more on its strategy and to strengthen cooperation
between public issuers.
The continuous increase in general government debt represents a growing financing
challenge in financial markets
General government debt has increased constantly over recent decades to stand at
€2,834 billion (September 2021), or 116.3 points
of GDP. Central Government bears the largest
share of the public debt (to the tune of €2,231 billion, nearly 80%) due to its recurring deficits
but also to its role as reinsurer which leads it, in times of crisis, to take on the financing of a
large part of the measures to support or revive the economy. This net borrowing is essentially
covered by calling on the financial markets. Among the public issuers on the financial markets,
AFT is the most important. Since 2014, it has been able to benefit from exceptional conditions,
due to accommodating monetary policies, with the Eurosystem’s considerable asset purchases
in the secondary market in Europe and interest rates kept at record lows.
A robust strategy implemented by the AFT that has made it possible to meet the
increase in net borrowing with the health crisis.
The main principles of compliance, transparency and flexibility applied by the AFT
enable it to establish its credibility among market participants. The health crisis and the
resulting increases in net borrowing have demonstrated the resilience of the agency’s
principles and practices in times of stress. Net medium- and long-term French debt issuance
rose sharply to €260 billion in 2020 and again in 2021, up from €200 billion in 2019. Against a
background of Eurosystem support in the secondary market, the additional volumes of debt
issued were well absorbed by the market. However, with the prospect of a gradual withdrawal
of purchases from the Eurosystem and a new form of competition from the European issuer,
the strategic analysis on which the agency bases its decisions would benefit from being
The Court of Accounts is considering three scenarios for the development
of AFT’s
role within the public issuers.
In the first scenario envisaged by the Court of Accounts, AFT would continue to play a
limited coordinating role with other public debt issuers:
ad hoc
interventions, without
necessarily matching resources
ex ante
. The second scenario is one of enhanced coordination
in which the agency would play a leading role: increased circulation of information,
establishment of monitoring indicators, and even a formal framework. The third scenario is the
establishment of new agreements for the issuing and debt administration, along the lines of
what has been practised with CADES since the end of 2017. As part of this, AFT has operational
responsibility for the financing activities of the entities that have signed agreements with it and
is in charge of implementing issue programmes. The Court considers that this scenario could
be more easily envisaged for a new issuer whose resources and organisation are not yet
Beyond sound public debt administration, a public finance strategy is necessary to
ensure the sustainability of public debt.
Good public debt administration makes it possible to obtain financing at a lower cost
and to raise the funds necessary to finance deficits. However, to ensure the sustainability of
the debt in the medium term, it is crucial to build a public finance trajectory that will allow the
debt to start falling and to rebuild room for manoeuvre to face a future economic slowdown.
The video of the hearing featuring the presentation of the report to the Finance
Committee is available on the website of the National Assembly.
The report will be available on the Court of Accounts’ website after the hearing.