The State budget

Revised Budget Act 2020

The Revised Budget Act for 2020 was promulgated on the 23 March 2020.

The impact of the health crisis and the government's economic support measures to address it, increase the financing requirement by €15.6bn compared to the initial Budget Act (LFI) for 2020. The State deficit to be financed in 2020 is thus increased to €109.0bn, compared to €93.1bn projected in the LFI for 2020.

In this context, Bruno Le Maire, Minister for the Economy and Finance, adopted the revised details of the financing programme for 2020.

Medium-and long-term issuances net of buybacks will stand at €210bn (+€5bn compared to the LFI for 2020). The net change in the BTF outstanding will amount to €27.5bn (+€17.5bn compared to the LFI for 2020).



2020 French budget bill


1. On Friday the 27th of September 2019, the Council of Ministers adopted the French Budget Bill for 2020. The total financing requirement will stand at €230.5bn, mainly consisting of €93.1bn to cover the deficit to be financed and €136.4bn to redeem medium- and long-term debt maturing in 2020. Absorbing a part of SNCF Réseau debt will also increase the government's 2020 debt redemptions by 1.8bn.

2. The financing requirement in 2020 will be met by (i) the medium- and long-term government debt issuance programme, net of buybacks, worth €205bn; (ii) resources from the active management of government shareholdings and earmarked for debt reduction for €2bn; (iii) the increase in outstanding short-term government securities for €10bn; (iv) an increase in correspondents’ deposits for €6.4bn, particularly due to contributions to the Innovation Fund; (v) a contribution from cash available in the Treasury’s account of €3.6bn; and lastly (vi) other cash sources of €3.5bn, assuming issue premiums net of discounts worth €3bn.

3.State debt service is expected to stand at €38.6bn, including €0.4bn in interest charges connected with the partial absorption of SNCF Réseau debt.

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 €74.5bn.

5. The detailed medium- and long-term financing programme for 2020 will be released in December 2019.


6. Since the beginning of 2019, France has benefited from historically low financing terms, against the backdrop of unprecedented low terms for the sovereign debts in the Euro area. The weighted average yield on medium- and long-term debt securities stood at 0.17% for the first three quarters of the year, compared to 0.53% in 2018 and an average of 2.17% from 2009 to 2014.

7. The deficit to be financed in 2019 has been revised downwards to €96.3bn, compared to the amount of €107.7bn expected in the 2019 initial Budget Act (LFI) passed in December 2018.

8. Other cash resources, including the recording of net treasury premiums, have been revised upwards to €12.5bn, compared to €3.5bn expected in the 2019 initial Budget Act. The favourable low interest rates resulted in the recording of further net treasury premiums in 2019. These premiums are at a higher level than expected in the initial Budget Act, due to the anchoring of interest rates at a very low or negative level and the gradual rolling over of benchmark securities with coupons in line with market rates.

9. Outstanding short-term government securities will increase by €4bn, compared with a rise of €15bn expected in the 2019 initial Budget Act, whilst remaining at a historical low level due to the recycling of significant net treasury premiums into a lower level of short-term securities issuance.

10. For 2019, issuance of medium- and long-term debt, net of buybacks, will remain unchanged at €200.0bn.

11. State debt service is expected to stand at €40.4bn, versus €42.1bn in the initial Budget Act, owing to the continuing extremely low level of short-term interest rates over the past year and to a downward revision in interest payments on securities indexed to inflation.



Annual Performance Plans (PAP) - Governement Debt and Treasury Management for 2019

State financing programme for 2020

On the basis of the 2020 Budget Bill, Bruno Le Maire, Minister for the Economy and Finance, has approved the indicative State financing programme for 2020.

In 2020, the State will need to finance a fiscal deficit forecast at €93.4bn and redeem €136.4bn in medium- and long-term debt maturing during the year (after buybacks in 2018 and 2019 of €41.1bn in securities maturing in 2020). Other factors to take into account include a positive €1.3bn contribution from other cash requirements and the partial absorption of SNCF Réseau's debt, which will account for €1.8bn in debt redemption.

This funding requirement will be covered by medium- and long-term borrowing (OATs) of €205.0bn, net of buybacks, and a €10.0bn increase in short-term borrowing. The increase in short-term borrowing will make securities more liquid, following a decline in issuance and the consequent decrease in outstanding BTFs in recent years resulting from large cash premiums on issues, following the drop in interest rates. The financing programme will be supplemented by a net total of €15.8bn from other resources, such as the increase in Treasury correspondents' deposits and contributions to the Fund for Innovation for €6.4bn.

This financing programme is part of the 2020 French Budget Act, which caps the net year-on-year increase in the nominal value of negotiable State debt with maturities of one year or more at €74.5bn.

As in previous years, Agence France Trésor 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.

AFT may buy back debt in 2020 (BTFs and nominal and index-linked OATs) depending on market conditions.


1 As adopted on 19 November 2019 by the National Assembly on first reading


1. Benchmark issues

Nominal bonds:
-    AFT will auction one new 2/3-year benchmark, one new 5-year benchmark and a new 10-year benchmark.
-    AFT will also examine, together with the primary dealers, the prospect of a syndicated issue of a new 30-year bond based on market demand.  

Inflation-indexed bonds: AFT will issue a new 10- to 15-year OAT indexed to the French consumer price index (OATi), and will auction a new 5-year OAT indexed to the euro-area consumer price index (OAT€i).

AFT will also continue to tap the green bond first issued in January 2017 to meet market demand, up to the limit of eligible green expenditures for 2020.

Finally, AFT will keep tapping all of the existing nominal and inflation-indexed bonds, depending on demand for them.

2. Auction rules and schedule

An auction of nominal or inflation-linked OATs may take place on the first Thursday of the month in August and December, depending on market conditions and after consultation with primary dealers. During the other months of the year, OATs with maturities of 8 years or more will be auctioned on the first Thursday of each month and OATs maturing in 2 to 8 years 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 adjusting the composition of benchmark bonds and off-the-run bonds in response to demand from investors as estimated by the primary dealers. AFT may also act on primary dealers’ recommendations to tap non-benchmark BTFs.

3. Managing average debt maturity

The strategy to reduce the average maturity of negotiable government debt initiated in 2001 has been put on hold. The interest rate swap programme will resume if and when market conditions allow.

4. 2019 status report

The gross nominal value of medium- and long-term debt issuance in 2019 stood at €245.6bn, consisting of €228.3bn in fixed rate bonds and €17.3bn in inflation-linked bonds.

AFT bought back €30.5bn in debt maturing in 2020 and €15.1bn maturing in 2021.

At the end of 2019, outstanding short-term debt (BTFs) stood at €106.9bn, marking a decrease of approximately €6bn compared to the end of 2018.