PARIS--France will erase the 100 billion euro ($117.89 billion) cost of its coronavirus economic recovery plan from its debt burden by 2025, Prime Minister Jean Castex said on Wednesday.
Castex said the recovery plan would focus on supporting companies and domestic production rather than spurring household demand as Germany has done with a value added sales tax cut. "The recovery plan should not weigh on public finances, quite the contrary," Castex told the Medef employers' federation's annual end-of-summer conference.
The government expects its public sector budget deficit to hit an unprecedented 11.4% of economic output due to measures to support the economy through the coronavirus crisis, pushing the nation's debt burden to nearly 121% of GDP.
Castex added that additional debt to finance the plan would be wiped out over five years thanks to the boost from injecting the equivalent of four points of GDP into the euro zone's second-biggest economy.
The French government will unveil details of the post-pandemic rescue plan to haul the 2.3 trillion euro economy out of its deepest slump since World War Two on Sept. 3. The government has already said money will be pumped into creating jobs, especially for young people, and training for those who lost their jobs during an unprecedented recession. Some 30 billion euros will target investment in tackling climate change.
Earlier Castex reiterated a government promise that taxes would not be increased to help finance the recovery stimulus and that planned cuts to business taxes would be maintained.
France will receive 40 billion euros in European Union subsidies to meet the initial cost of the recovery.
