France can’t yet gauge impact of debt relief for train operator: Financing Ministry

PARIS (Reuters) – France’s Finance Ministry said on Friday it was not yet possible to measure the impact on public finances of the debt relief the government offered to national railway operator SNCF.

Prime Minister Edouard Philippe offered to absorb 35 billion euros ($41 billion) out of a 47 billion euros debt pile held by SNCF as part of efforts to end a rail strike at the operator.

Additional debt could hurt President Emmanuel Macron’s policy of restoring France’s fiscal credibility in Europe, just a few months after having brought the deficit below 3 percent for the first time a decade.

Under the announced plan, the government would wipe 25 billion from SNCF books in 2020 and another 10 billion in 2022.

That would ease the load on the railways, but only by moving it to an area of state liabilities that still has to be footed by the taxpayer.

The impact on public finances will depend on the way the country’s official statistics body INSEE decides to account for the debt absorption, the ministry said in a statement.

INSEE is in talks with its counterpart for the European Commission, Eurostat, and should announce its opinion “before the end of the year,” the ministry said.

“The analysis by French authorities is that the debt of SNCF’s network could be reclassified within the public debt, without having a direct impact on public deficit,” it said.

“Consequently, it is not possible today to comment on the impact on the trajectory of public finances of the taking over of SNCF’s debt by the state,” it added.

Reporting by Mathieu Rosemain and Sophie Louet; Editing by Matthew Mpoke Bigg



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