The State budget

French Budget Bill 2024


1. This morning, the French Budget Bill for 2024 was presented to the Council of Ministers. The total financing requirement will stand at €299.7bn, down €10.6bn compared to the 2023 updated financing requirement, mainly consisting of (i) €144.5bn to cover the deficit to be financed, down €27.6bn compared to the updated 2023 deficit, and (ii) €160.2bn to redeem medium- and long-term debt maturing in 2024, up €10.6bn compared to 2023.

2. The financing requirement in 2024 will be met by (i) the medium- and long-term government debt issuance programme, net of buybacks, worth €285bn, (ii) an increase in outstanding short-term government securities (BTFs) for €7.7bn, (iii) €6.5bn of Covid debt redemption from the Caisse de la dette publique (iv) and other cash resources of €0.5bn.

3. State debt service is expected to stand at €52.2bn.

4. The net year-on-year increase in the nominal value of negotiable State debt with maturities of one year or more will be capped at €129.5bn.

5. The detailed medium- and long-term financing programme for 2024 will be released in December 2023.



6. Since the beginning of 2023, the weighted average yield of medium- and long-term debt securities issued stands at 2.95%, compared to 1.43% in 2022, an average of 1.16% from 2009 to 2021, and yields of 4.15% from 1998 to 2008.      

7. The deficit to be financed in 2023 has been revised upwards to €172.1 bn, compared to the amount of €164.9bn provided for in the 2023 initial Budget Act (LFI) promulgated in December 2022.

8. “Other cash resources” are projected at -€13.9bn, as a result of discounts at issuance, compared to +€0.5bn in the 2023 LFI.

9. The drawdown of the Treasury’s account stands at €27.6bn, against €24.5bn in the 2023 LFI.

10. Outstanding BTFs will increase by +€20bn, against +€3.3bn in the 2023 LFI.

11. For 2023, issuance of medium- and long-term debt, net of buybacks, will remain flat at €270.0bn.

12. State debt service is expected to stand at €55.5bn, versus €51.7bn in the 2023 LFI, mainly as a result of the rise in short-term interest rates.


State financing programme for 2023

On the basis of the 2023 Budget Bill, which provides for medium- and long-term borrowing (OATs) of €270.0bn, net of buybacks, Bruno Le Maire, Minister for the Economy, Finance, Industrial and Digital Sovereignty, has approved the indicative State financing programme for 2023.

From 2023, based on the draft of the Budget Bill submitted to the National Assembly on 26 September, the State's forecast financing requirement will stand at €304.9bn, mainly due to a budget deficit of €164.9bn and €149.4bn of medium- and long-term debt maturing in 2023. This financing requirement will be covered by medium- and long-term (OATs) borrowing of €270.0bn net of buybacks, a €3.3bn variation in short-term debt (BTFs) outstanding, a €18.0bn contribution from the balance of the Treasury account, €6.6bn of Covid debt redemption from the Caisse de la dette publique and other cash sources for €0.5bn.

As in previous years, Agence France Trésor (AFT) will adjust its debt issuance programme to meet demand and guarantee a liquid market for its securities. The programme stipulates that bonds linked to French and European inflation indices will account for approximately 10% of net medium- and long-term debt issuance.

In addition, AFT may buy back debt in 2023 (BTFs and nominal and linked-linked OATs) depending on market conditions.

1. Creation of new securities
In the nominal bond segment, AFT will issue one new 3-year benchmark, one new 5/6-year benchmark and, not earlier than in the second quarter, two new 10-year benchmarks via auction. AFT will also examine, together with the primary dealers, the prospect of a syndicated issue of a new 30-year benchmark, depending on market conditions.

In the inflation-linked bond segment, AFT will auction a new 10-year European inflation-linked bond (OAT€i). AFT will also consider, depending on market demand, the opportunity of issuing by syndication a 15 to 20-year French inflation-linked bond (OATi).
AFT will also keep tapping its three green bonds according to market demand. All of these issues will be carried out within the limit of eligible green expenditure for 2023, the amount of which will be communicated next January.

More generally, AFT will keep tapping all of the existing nominal and European and French inflation-linked bonds, depending on demand for them.

2. Methods and timing of auctions

An auction of nominal OATs and/or an auction of linked OATs may take place on the first Thursday of December, depending on market conditions and after consultation with primary dealers. During the other months, OATs with maturities of more than 8.5 years will be auctioned on the first Thursday of the month and OATs with a maturity of 2 to 8.5 years and inflation-linked OATs will be auctioned on the third Thursday of each month.

Auctions of nominal bonds will be held at 10.50am (Paris time), and auctions of inflation-linked bonds at 11.50am (Paris time). BTFs will be auctioned every Monday at 2.50pm (Paris time).

AFT will inform the market of any changes to the auction schedule.

Regarding the securities to be auctioned, as in previous years, AFT reserves the right to adapt its issuances by tapping non-benchmark issues in response to demand from investors as estimated by the primary dealers.
3. New collective action clauses in new bonds

Effective the first day of the second month following the ratification by all parties of the Agreement Amending the European Stability Mechanism Treaty, new State-issued bonds will include “single-limb” collective action clauses.

For newly created nominal OATs with maturities of 2 years or more, redemption dates will be changed to dates in March or September. For inflation-linked OATs, redemption dates will remain in March and July.

 4. Managing average debt maturity

The implementation of the reduction of the average maturity of the debt initiated in 2001 remains suspended. The interest rate swap programme will be reactivated if market conditions warrant.

5. 2022 financing programme status report

The gross nominal value of medium- and long-term debt issuance in 2022 stood at €286.2bn, consisting of €260.8bn in fixed-rate bonds and €25.4bn in inflation-linked bonds.

In 2022, AFT bought back €26.2bn of debt maturing in 2023.