France growth plans 'realistic'

LONDON - FRANCE'S plans to slash its budget deficit are 'realistic and prudent,' the country's finance minister said on Sunday, hitting back at critics who said its growth forecasts are overly optimistic.

Speaking to the Financial Times, Christine Lagarde said France was determined to do 'whatever it takes' to reduce its budget deficit to 6 per cent in 2011.

President Nicolas Sarkozy's conservative government cut its 2011 growth forecast to 2 per cent on Friday, bringing it closer to that of private sector economists. 'That is a very, very strong commitment on the part of the president and the government,' Ms Lagarde told the newspaper.

The reduction in the 2011 forecast from a previous 2.5 per cent came a day after the Bundesbank raised its expectations for Germany's expansion to 3 per cent from 2 per cent, underscoring the divergence of the euro zone's top economies.

'I don't think we should be short-sighted,' Ms Lagarde told the newspaper.

'It is obvious that in 2009, because of its structure, Germany took a much bigger hit than France. It is hardly surprising that they would catch up faster, but that is only due to the fact that they went down farther.' France has told Brussels it will reduce its deficit from around 8 per cent of GDP this year to 3 per cent by 2013, implying some 100 billion euros (S$172 billion) in savings. It has yet to detail where much of those savings will come from.

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