PRESS RELEASE
27
th
May 2015
PUBLIC FINANCES AND ACCOUNTS
FRENCH CENTRAL GOVERNMENT BUDGET FOR
2014
Results and management
The
Cour des comptes
–
French Supreme Audit Institution
–
hereby presents its report on the French
Central Government budget for 2014 in accordance with Article 58 of the Organic Law Governing Finance
Acts (LOLF). This report is based on 59 analyses carried out, by mission and by programme, concerning
the use of authorised expenditure, and three analyses of fiscal and non-fiscal revenues and fiscal
expenditure.
Implementation of the 2014 Central Government budget has generated a weaker fiscal balance than in
2013, due to a fall in net income and an increase in net general budget expenditure. Public debt continues
to rise steadily.
Increased deficit
The Central Government budget for 2014 showed a deficit of
€85.56 bn, up
€
10.69 bn on 2013, as the downward
trend in the Central Government budget deficit over the last few years was reversed.
The deficit for 2014 was
€
2.99 bn higher than the figure set in the Initial Finance Act (LFI). The implementation of
the budget was compromised by optimistic revenue forecasts and delayed expenditure adjustments.
With the budget deficit remaining high, there was no slowdown in the increase in Central Government debt, which
rose from
€
1,457 bn at the end of 2013 to
€
1,528 bn at the end of 2014.
Low nominal interest rates helped to contain debt interest payments at
€
43.2 bn, but there is no guarantee that
the debt will be sustainable in the medium term.
Sharp fall in revenues
In 2014, Central Government revenues stood at
€
291.9 bn, down
€
9.3 bn on 2013, on the back of a
€9.7 bn fall in
tax revenues, the first since 2009. This fall was mainly due to tax reduction measures prior to the LFI for 2014.
As a result of over-optimistic forecasts on economic growth and revenue elasticit
y, revenues were €10 bn lower
than the initial estimates.
Tax expenditur
e in 2014 is estimated at €78.87
bn in the Finance Bill (PLF)
for 2015, €1.14 bn less than the figure
shown in the PLF for 2014, owing to a lower than forecast cost of tax credit for competitiveness and employment
(CICE). The provisions of the public finance programming bill for 2012-1017 intended to control tax expenditure
were unevenly implemented; its valuation is still largely outstanding.
Stabilised expenditure
General budget expenditure stabilised compared to 2013, with net expenditure up (+
€4.23 bn).
Deducting
exceptional expenditure, including funding for the launch of the second future investment programme (PIA 2), net
expenditure fell (-
€
1.89 bn), but if the disbursements made on behalf of Central Government by the PIA
manager-operators are added, expenditure remained stable (+
€0.08 bn).
One of the main reasons for this stabilisation was the reduction in the debt burden (-
€
1.73 bn). Some
expenditure items are once again rising, including the wage bill and pension contributions for example.
The cap on the
0 value
expenditure norm
was reduced by €3.3 bn and
adhered to. However, a restrictive
definition of its scope excluded certain expenditure, includin
g €3.31 bn in disbursements made
on behalf of
Central Government by the manager-operators of the two PIAs. As a result of the system put in place for the
PIAs,
this figure of €3.31 bn
was shifted off-budget and was not posted in the Central Government budget or
incorporated in the scope of the expenditure norm.
In the absence of significant structural savings, budget regulation of expenditure was once again fully mobilised,
and certain costs were carried forward to future financial years.
Overall assessment of budget management
The
Cour des comptes
has observed the persistence of under-budgeting and irregularities that have been cited in
previous years. The Defence mission budget intended for external operations and the wage bill once again
proved insufficient. The Central Government special appropriation account for Financial Investments again bore
certain costs which were not consistent with its underlying asset-based approach.
Some progress was made on the performance approach, in particular with the definition of mission indicators, but
the number of indicators remains too high and should be restricted to those which reflect the match between
resource allocation and performance.
Moreover, the performance monitoring tools do not measure the effects of
the additional resources allocated to the priority areas, School Education and Work and Employment.
The performance approach should be used as the main tool for controlling expenditure, which is not currently the
case.
The 2014 budget implementation shows that basing an initial finance bill on over-estimated forecasts of tax
revenues and frequently under-calibrated budget allocations prevents the budget from being implemented in
accordance with France’s commitments.
This illustrates the limits of the traditional techniques intended to contain expenditure: cancelled loans are
peaking, cost deferrals are increasing and Central Government operations are financed outside its budget. More
than ever, it confirms the need for a two-pronged approach: tax revenue forecasts should be based on cautious
assumptions and expenditure should be controlled through explicit choices which will lead to lasting savings.
The
Cour des comptes
makes nine recommendations and notes that this year implementation of the
recommendations made in previous years has improved.
To read the full report and the budget implementation notes click here
In accordance with its
commitment and France’s
open government approach, the
Cour des comptes
is, for the first time,
publishing the data used to prepare its report at the same time as the report itself.
PRESS CONTACTS
Ted Marx
Head of Communication
T
+33 (0)1 42 98 55 62
tmarx@ccomptes.fr
Denis Gettliffe
Head of Press Relations
T
+33 (0)1 42 98 55 77
dgettliffe@ccomptes.fr
@Courdescomptes