France plans stake sales to fund public investment
Reuters in Paris
France will use further sales of state shares in firms to help finance a new 12 billion euro (HK$119.5 billion) public investment drive, Prime Minister Jean-Marc Ayrault said.
With the economy struggling to eke out growth, Ayrault’s government is eager to keep up investments over the next decade while limiting the impact on the public finances, which it is struggling to bring into line with European Union demands.
“Investment and being serious about the budget go hand-in-hand. In order to respect the state’s financing strategy, spending under the investment programme will be phased in gradually,” Ayrault said in a speech unveiling the package.
“Revenues from the sale of state stakes will help finance it by actively and responsibly managing (the state’s) assets,” he added.
Most of the package, half of which will target environmentally friendly investments, will not be spent until after 2016, when investments peak under a current, multi-year 35 billion euro (HK$348.6 billion) package.
While the government plans to use further share sales, it will not give up control of companies whose shares it sells, an official in Ayrault’s office said on condition of anonymity.
Insisting that the impact of the investment drive would be minimal on public finances, another official declined to say how much of the total package would be financed by share sales.
“We are not setting that in advance because to have good results from share sales you have to be a bit opportunistic in terms of valuations,” the second official said.
The Socialist government has already booked 2 billion euros by selling shares in aerospace group EADS, defence contractor Safran and airport operator ADP.
In addition to environmentally friendly investments, the rest of the money will go towards research and development as well as health, transport and industrial projects.
The previous conservative government launched a 35 billion euro investment package in 2010. About 28 billion euros have so far been committed, but only 5 billion euros have been spent.
In addition to the 12 billion euros in new money, another 5 billion euros is to be mobilised separately to finance the roll-out of new smart electricity meters.
The new package also does not include 20 billion euros already in the pipeline for investments over the next 10 years in a new high speed Internet network and 4.5 billion euros for hospitals.