PARIS (Reuters) – The French government aims to hive off from the state balance sheet extra debt linked to the COVID-19 pandemic, lodging it in a special structure to pay it down gradually, Finance Minister Bruno Le Maire said on Monday.
The government expects the public debt burden to surge to a record 121% of gross domestic product this year due to the crisis, up from just shy of 100% before the outbreak.
“We have to repay this COVID debt. We will repay it through growth, not through taxes. We will repay it by segregating it and separating it from the initial 100 percentage points,” Le Maire told lawmakers as he presented a 2020 budget revision.
France has since 1996 used a similar strategy for social security debt that was transferred to a special structure, the CADES, paying it down gradually until 2033 using a dedicated 0.5% tax on most forms of income.
A finance ministry official said the decision on whether the debt would be housed in the CADES or in another structure would be made later this year and that this debt repayment would in any case be spread beyond 2033.
(Reporting by Leigh Thomas; Editing by Gareth Jones)