Public Finances and Debt Management

Extract

[...] (Impôts d'avant : - Taxe d'habitation - Taxe foncière - Taxe professional foncier + CVAE Partie suppressed) - Law of regulation Retrace the execution of the budget renamed as 'laws relating to the results of management and approving the accounts of the year' (advanced on May 1st) - The budget calendar is rationalized The debate on the stability program and the debate on the orientation of public finances are merged into a specific sequence dedicated to the multi-year orientation of public finances, which take place in the spring. On this occasion, the government will have to present an annual report on the evolution of the national economy and on the orientations of public finances - A new parliamentary session dedicated to the subject of public debt is established before the start of the ordinary session, in the autumn. [...]

[...] France is subject to such a procedure since July as well as Italy, Hungary, Poland, Malta, Slovakia, and Belgium. A procedure put on 'hold' in June 2025 for most (except Belgium) Romania, however, has been concerned since 2020 Austria since July 2025 Risk: being subject to a fine that can reach up to 0.05% of GDP with a revision every six months until regularization Danger: we are increasing the state's debt Section 2 - The incidence of the LOLF > For a long time, organic decree of January relating to the organic law on financial laws this is not the LOLF Logic of means, and voted services of the budgets were immutable) Mechanical allocation of means to each ministry > Replaced by the Organic Law of August on Financial Laws (LOLF) called the Financial Constitution sets up a results logic Genesis > Influence from the 1970s of new public management (research and evaluation of efficiency) Logic of transparency and performance Several proposals and reform projects > Particularity of the LOLF: parliamentary initiative, resulting from a bill proposal - It is the fruit of an agreement between the right and the left Alain Lambert (right, Senate) and Didier Migaud AN) > The LOLF was validated by the Constitutional Council (decision of 25 July 2001) > The LOLF is based on fundamental principles that have upended the management of public finances. [...]

[...] They give a faithful image of the result of their management, of their assets and of their financial situation > The High Council of Public Finances attaches itself, on the other hand, to the realistic nature of the forecasts II- Principle of Real Balance Territorial Collectivities > For territorial collectivities, strict principle: For these, Article L1612-4 of the General Code of CT emphasizes that a collectivity's budget must be voted in real balance Obligation that each section be balanced Prohibition for CTs to borrow to repay the loan or to finance operating expenses > It must be that expenses and revenues are balanced BUDGET OF CT: Functioning REVENUE - Local Taxes - Tolls - State Donations - (Auto financing) EXPENSE - Personal Expenses - Fluids - Interests and Loans Investment RECIPE - State Grants - EU Grants - Loan - (Self-financing) EXPENSE - Works - Supplies - Services - Supplies - Loans > Self-financing can be achieved if revenues are more significant than expenses For CTs, we can only borrow for investment expenses State > Balance is more of an objective > Article 1st of the LFF: - « In the conditions and under the reservations provided by this organic law, the finance laws determine, for a financial year, the nature, amount and allocation of the State's resources and charges, as well as the budgetary and financial balance that results from it. They take into account an economic balance defined, as well as the objectives and results of the programs they determine. [...]

[...] Strict application for local authorities > One should not overestimate certain revenues or certain expenses? The prefect will verify the real balance and sincerity > This principle has been extended to the State, first by constitutional jurisprudence: - Already marked by the Constitutional Council in 1993 in its jurisprudence - DC - 21 June 1993 - Principle reiterated in the framework of the LOLF in two articles s27 and 32 - Article 32 highlights that 'the finance laws present in a sincere manner the entire resources and charges of the State. [...]

[...] The Budgetary Principles of Public Finance CHAPTER 1 - SPECIFIC REQUIREMENTS I - Principle of Budgetary Sincerity > Principle originally provided for local authorities > Art L. 1612-4 CGCT The budget of the territorial community is in real balance when the operating section and the section d'investment are respectively voted in balance, the revenues and expenses having been evaluated in a sincere,? [...]