The general rapporteur of the Senate Finance Committee, Alberic de Montgolfier (LR), calculated that the deficit would still be above 3% in 2020 if the government had not benefited since the start of the five-year term from low interest rates. interest and improvement of the economic situation.
The current government boasts of being the first since 2007 to bring the deficit back below the fateful 3% of GDP mark. But can he really claim the paternity of this success? Not really, if one believes Alberic de Montgolfier, Senator LR from Eure-et-Loir. The general rapporteur of the Senate finance committee calculated that the credit went more to Mario Draghi, the former president of the ECB, whose unconventional monetary policy drastically brought down the borrowing interest rates of States, until they become negative. “Without the rebound in growth and the fall in the debt burden, the deficit would be higher in 2020 than in 2017 and would still exceed the Maastrichtian threshold of 3% of GDP”, is it written in a report released last week by the senator.
To reach this conclusion, Alberic de Montgolfier delved into the statistics of the public accounts. These show a decline in the deficit, from 2.8% of GDP in 2017 to 2.2% expected next year. But to judge the real efforts of a government in terms of budgetary reliability, the custom is that we look more at the structural deficit, namely the balance free from the effects of the economy and exceptional items. In this area, the government’s record is very mixed, even if it remains positive: the structural balance, which had reached -2.4% in 2017, should be reduced to -2.2% in 2020.
Yet Senator LR believes that these indicators “Lead to overestimating the effort to restore public accounts attributable to the government”. Indeed, he recalls that a “Exogenous decrease in the debt burden linked to the evolution of monetary policy is wrongly recorded as an ‘effort in expenditure’ in the framework” the calculation of the structural deficit. Clearly, it suffices for the bill linked to the cost of debt to lighten for the government to be able to give the impression of serious budgetary matters.
An anomaly for Alberic de Montgolfier, who prefers to reprocess these data, as the European Commission does to calculate its “expenditure rule”. The adoption of this method results in a completely different assessment for the policy carried out by the government. Thus, the reduction in the burden of the debt burden would explain 0.5 point of the reduction in the deficit between 2017 and 2020. In addition, another part of the decrease in the budget balance over these three years (0.4 point) would be due to improving economic conditions. In all, it would therefore be 0.9 point less deficit which would be like a gift to the government, without it having had much to do, according to Senator LR. If we add this 0.9 point to the deficit of 2.2% expected next year, then we end up with 3.1%. “The government took advantage of the improvement in the economic situation and the fall in the debt burden to postpone the recovery in the structural situation of the public accounts”, accuses Alberic of Montgolfier.
Same level as under Holland
For the senator, the current executive would therefore have degraded over three years the primary structural balance (excluding debt charge) by 0.3 point. With this method of calculation, the effort to save on expenditure (again restated for variations in the cost of debt) would be 0.2 percentage point of GDP on average between 2018 and 2020, i.e. the same level as that observed under Francois Hollande.