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The revised draft budget bill (PLFR) for 2010, updated today by the Government, opens €6.3bn of commitment authority, including €3.9bn in payment authorizations, to give France, in parallel with the processes engaged by all other European countries, the tools and means to meet the commitments made at the Euro area level through the implementation of the mechanism of support to Greece through bilateral loans.
In this context, Christine Lagarde, Minister of Economy, Industry and Employment, adopted the revised details of the funding program for 2010.
The budget deficit is revised upwards by €3bn, at €152bn, reflecting an additional expenditure of €3.9bn and an increase in forecast revenues of €0.9bn, resulting in an net increase of €3bn of the borrowing need of the State compared to the Amended Financing Act of 9th March 2010. The need for the State funding requirement will therefore come to €239.1bn.
Under these circumstances, medium-and long-term issuances net of buybacks (BTANs and OATs) will amount to €188 bn unchanged compared to the amount mentioned in the press release published on the 22th December on the medium and long-term financing program. The increase of outstanding short term debt (BTFs) will stand at €1.2bn, a €0.2bn downward revision compared to the detailed State financing program for 2010 published on 20th January 2010.
The debt limit on the medium and long-term debt, as published on 9th March 2010, remains unchanged at €105bn.
Other cash resources are revised upwards, at €5.5bn, due to the premiums recorded since the beginning of the year resulting in a net cash inflow of €2.4bn. This amount reflects the fact that the coupons of bonds which have been tapped since the beginning of the year, have been almost always higher than market yields. Out of the 30 medium- and long-term bonds issued since January up to early April, 28 have resulted in a premium, with an average price at 103.3% of the nominal. Applied to the total nominal value issued, €73.8bn, this represents an additional cash inflow of €2.4bn.
The contribution of change in Treasury account is slightly adjusted upward to €14.9bn, a €0.6bn increase compared to the estimate provided in the Amended Financing Ac of 9th March 2010, an amount that includes the first buybacks on debt maturing in 2011.
If case of activation of the bilateral loan, in accordance with the revised draft budget bill, the deficit, as defined in the national accounts, would be similar to the last notification sent to the European Commission: it would amount to 8.0% of GDP in 2010.
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