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French Parliament Adopts Public Finance Governance Bill

by Ulrika Lomas,, Brussels

29 November 2012

The French parliament has recently adopted a bill relating to the programming and governance of the country’s public finances.

According to the French finance ministry, the bill is designed “to perfect” the instruments for managing the public finances, and follows ratification of the stability, coordination, and governance treaty within the Economic and Monetary Union on March 2.

The constitutional law on public finance programming and governance introduces four "major innovations."

The bill "formalizes" the content of the public finance programming laws, which will in future have to fix a medium-term objective (objectif à moyen terme – OMT) in the form of a target structural balance of accounts for all public administrations. The programming laws will also define the multi-annual trajectory to meet this target figure and define details of the corrective mechanism.

Presided over by the president of the Court of Auditors, an independent body, the High Council of Public Finances will issue public notices on the reliability of macroeconomic forecasts used as a basis for drafting the finance laws and on adherence to the public finance trajectory.

The High Council will also publicly alert the government and parliament to the need to trigger the corrective mechanism, in the event of a significant deviation from the OMT, requiring the government to propose appropriate remedial measures to parliament.

Finally, the structural balances of all public administrations are to be recorded in all of the country’s finance laws.

The French Senate adopted the bill during a second reading on November 22, following adoption of the text by the National Assembly on November 19. The bill had been modified by the Senate during its first reading on October 30.

TAGS: Finance | tax | law | France

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