France to borrow heavily to prime recovery

The West Australian November 5, 2009, 8:03 am
France's President Nicolas Sarkozy delivers a speech unveiling France's second national plan against cancer in Marseille, southern France, November 2, 2009. REUTERS/Eric Feferberg/Pool (FRANCE POLITICS HEADSHOT HEALTH IMAGES OF THE DAY)

REUTERS / POOL ©

France will take out a national loan of between 25 billion euros ($A40.82 billion) and 50 billion euros ($A81.63 billion), the office of French President Nicolas Sarkozy said overnight, eying post-crisis investments.

Sarkozy will decide on the exact amount "at the beginning of December", his office said.

The president had announced in June that the French state would take out a "grand loan", from markets or the public, to finance strategic investments in the wake of the economic crisis. But he did not offer a figure at the time.

The size of the plan sparked heated debate in the past week, with a group of lawmakers from Sarkozy's right-wing majority calling for a loan program of up to 100 billion euros ($A163.27 billion) to be spent in the coming five to 10 years.

The French presidency opposed the 100 billion euros ($A163.27 billion) figure, but, according to one official, a 25 billion euros ($A40.82 billion) to 50 billion euros ($A81.63 billion) package serve as a compromise.

"Those who had reservations about the grand loan consider that 25 billion euros is acceptable, and those who were for the grand loan consider that 50 billion euros begins to sound interesting," the official said.

Finance Minister Christine Lagarde said earlier that France must keep an eye on its deteriorating public finances as it decides how much money will be raised for such investment projects as high-tech transport and third-generation biofuels.

"If we do something too big, just for the sake of making a big gesture, we risk deteriorating France's rating," she said on LCI television, referring to the country's investment rating.

"We shouldn't let this be a source of controversy," she said.

"It's petty bickering."

Tonight on 7 Perth and GWN

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