BELGIUM: French President Nicolas Sarkozy defends his budget plans to euro zone finance ministers and European Central Bank officials in Brussels

French President Nicolas Sarkozy has tried to reassure critics that he would stick to fiscal discipline but said he could meet a timetable for balancing the budget only if growth is better than expected. French President Nicolas Sarkozy, who came to Brussels on Monday (July 9) for an unprecedented presentation of his economic plans to euro zone finance ministers and the European Central Bank (ECB), found no support for his complaints about a strong euro hurting French growth. All euro zone countries, including France, agreed in April in Berlin to balance their books by 2010. But Paris changed its mind after Sarkozy became President in May, and now wants a two-year delay to boost growth through various tax cuts. Sarkozy told his cabinet on Monday that the previous French government had been over-hasty in agreeing to balance its books by 2010, government spokesman Laurent Wauquiez said. ''There are rules and rules left space for exceptions. So if you ask for exceptions, they must correspond to the rules,'' Eurogroup President Jean-Claude Juncker told reporters before the monthly meeting of the 13 euro zone ministers and ECB President Jean-Claude Trichet. ''I said already what I wanted to say. The stability Pact has to be respected of course. After having heard what we will hear, I will see what I say, depending of course on what I will hear,'' Trichet added. EU budget rules, the Stability and Growth Pact, say deficits cannot be higher than 3 percent of gross domestic product and should be cut by at least 5 percentage point a year during economic good times. The rules underpin the euro. Many euro zone officials want to see the pact respected after repeated breaches of the deficit ceiling by France and Germany forced its revision in 2005. Germany has made painful budget deficit cuts much more quickly than France and expects to tighten policy further. ''It gives us discipline and Germany was in favour of the Growth Stability Pact in 2005. So why should we start asking questions now," German Finance Minister Peer Steinbrueck said before entering the meeting. Belgian, Dutch and Austrian finance ministers also stood by the 2010 deadline. After an hour-long meeting with finance ministers of the euro zone, Sarkozy told a news conference he would use all extra revenue from boosting growth to improve public finances. ''I had to be realistic, honest and transparent, and if we will not be able to do so, then I will ask for a postponement until 2012. 2012 is not unrealistic because it was a date once established by all the finance ministers,'' Sarkozy told reporters. Sarkozy also said he had spoken with all European finance ministers, as well as British Prime Minister Gordon Brown about his nomination of former Socialist Finance Minister Dominique Strauss-Kahn to run the International Monetary Fund. ''I can tell you that there are two persons supporting the nomination of Dominique Strauss-Kahn, Jean-Claude Juncker and myself," he said. "I went to see all the finance ministers and I spoke over the phone, before I left for Brussels, with Gordon Brown,'' Sarkozy said. Strauss-Kahn, 58, a respected, multilingual advocate of social democratic economics, won the backing of the influential chairman of the 13-nation euro zone, Jean-Claude Juncker, to succeed Rodrigo Rato of Spain, who steps down in October. France already holds three key international economic posts, with Pascal Lamy at the World Trade Organisation, Jean-Claude Trichet at the European Central Bank and Jean Lemierre at the European Bank for Reconstruction and Development.

ITN Source | July 10, 2007

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