15 December 2004: Indicative State Financing Programme for 2005

This page is an archive, only available in English and French.


Mr Hervé GAYMARD, Minister of Economy, Finance and Industry, has approved the indicative financing programme of the French Republic for 2005.

According to the draft Financial Bill for 2005, the State budget deficit will amount to €45bn and the redemption of long-medium term debt coming to maturity amounts to €66bn. The State funding requirement will therefore come to €111bn.

This funding requirement will be covered in full by medium and long term borrowing. The corresponding 2005 net issuance programme of €111bn is €11bn - i.e. 9%- lower than the programme realized in 2004. Indeed, 2004 net borrowing amounted to €bn122, in agreement with the forecast made public in December 2003. Short term debt will be stabilised in 2005 at its end of 2004 level, i.e. approximately €100bn according to current projections. Short term debt has been reduced by €10bn in 2004.

As in 2004, French CPI and Euro Zone HICP index-linked bonds will account for at least 10% of medium and long term notes issuance. AFT will be able to issue significantly more than 10% of its programme in inflation linked bonds, if justified by demand.

Hervé GAYMARD underlined that it has been possible to decrease the State short term debt by €10bn in 2004 because the budget improved and the proceeds of State asset sales were allocated to debt reduction. He confirmed that the apportion of privatizations and divestitures receipts to debt reduction will be pursued in 2005.

Securities buybacks in 2004 made it possible to reduce by €7bn the amount of debt redemption in 2005. Depending on market conditions throughout 2005, AFT will implement buybacks of securities falling due in the coming years

The Government has made a priority to control the debt. The 2005 Financing Programme is part of this policy.


In billion euros 2004
(as estimated
 in  draft 2005 Finance
 (draft finance bill)
(borrowing program, December 2004)
Borrowing requirements
Long-term debt redemption 36 33.8 33
Medium-term debt redemption 30.5 39.3 33
Budget deficit 49.1 44.9 44.9
Total borrowing requirement 115.6 118 111
Funding sources
Medium- and long-term financing, comprising 122 118 111
Net BTF increase -9.6 0 0
Change in Treasury correspondents' deposits 3.2 0 0
Change in the current account at Banque de France 0 0 0
Total funding sources 115.6 118 111

Press contact:
For the Minister:
Frédérique Bayre

For the Agence France Trésor:
Corinne Dromer



1 - Major Elements of the 2005 Financing Programme

For 2005, the financing requirements of the State will amount to €111bn. Funding will be provided in full by net medium and long-term borrowing. No net variation of short term debt is expected.

2 - Long and Medium-term Borrowing in 2005

Amounts to be issued

Net issuance of medium and long-term securities will amount to €111bn. In 2005, as in the past, AFT will be allowed to operate debt buybacks and/or switches, depending on market conditions and financing needs.

Net issuance will be composed of inflation-linked bonds for at least 10% - i.e. €11bn or more, in particular if buybacks or switches occur- , of medium term notes (BTANs) for 45% and of long term OATs for 45%.

As in 2004, AFT will be able to issue significantly more than 10% of its programme in linkers, if there is significant demand .

This programme does not take into account possible issuance in foreign currencies.

Benchmark Lines Issuance Policy

As in previous years, AFT will issue two new 5-years and two new 10-years benchmark bonds. To ensure their liquidity, these new lines will be brought to a large enough size through subsequent auctions or "taps". In addition, a new March 2007 BTAN will be created.

Regarding inflation-linked bonds, AFT, in close co-operation with SVTs, will examine issuance of new bonds as well as auctions of existing OATis and OAT€is. AFT will issue index-linked bonds on every auction month, i.e. every month except August and December.

AFT, together with SVTs, will keep under review the market of its floating rate securities.

Auctions Schedule and Rules

AFT will not auction in August and December. OATs will be auctioned every first Thursday of the month, and BTANs every third Thursday. The first OAT auction will take place on January 6, 2004.

As regards the lines to be auctioned, AFT retains capacity to adjust to final demand as reported by the SVTs and tap non-benchmark lines or offer only one single line at any given OAT or BTAN auction.

As in 2004, index-linked bond auctions will take place on BTAN auction days, i.e. every third Thursday of the month. The hour of the auction is advanced at 11:50 am (Paris time).

3 - Short-term Financing in 2005

The development of the BTF market, initiated in 2002, has proved satisfactory. As a result, the outstanding amount of BTFs will be stabilised.

BTF auctions will take place every Monday and will include the issuance of 3-month BTFs, along with either 6-month or 12-month BTFs, as well as a possible additional line according to demand and to the needs of short-term cash reserve management.

As in 2004, issuance of the 3-month, 6-month and 12-month securities will be organised in order to maximise investors opportunities throughout the year.

4 - Managing the average maturity of debt

The Minister has confirmed the policy of average debt maturity reduction. The interest rates swap programme will therefore be resumed as soon as market circumstances permit. Subject to this condition, the average maturity target for year-end 2005 is 51/2 years, i.e. a reduction of about 6 months from year-end 2004. AFT confirms that it will inform market participants before resuming swap operations.

5 -Debt and Cash Management

AFT will examine with SVTs how developments of short term market systems and instruments can benefit the management of the treasury of the State.

AFT will work with SVTs for the modernisation of individual investors' access to the OAT's market.

To prepare the next three-year selection of SVTs in July 2006, AFT will review the contents of the SVT charter.

6 - 2004 Summary

2004 gross medium and long-term borrowing amounted to €132.4bn, with fixed-rate OATs accounting for €52.9bn, linkers (OATis and OAT€is) for €24.1bn and BTANs for €55.4bn. Buybacks, executed through one reverse auction or over-the-counter, totalled €9.6bn and concerned mostly securities maturing in 2005. Net issuance thus meets the target set for the year, and the financing programme has been implemented as planned and published, as on previous years.

Press contact:

Agence France Trésor:
Corinne Dromer