France wants to take on railway debt
After strikes that have gone on for two months, France's government has pledged to absorb 35 billion euros of the state rail company SNCF's debt and raise annual investment by 200 million euros. In return, the company must agree to reforms. Commentators are not convinced the deal will work.
An unprecedented challenge
The deal proposed by Macron will pose a true challenge, Le Monde fears:
“This give and take is nothing new. The German state proceeded in the same way in 1994 when it assumed an equivalent debt load. But when it comes to the SNCF, the equation is based on a very large unknown. Will the company be able to make an effort the likes of which it's never succeeded in doing in the past? Current estimates put its competitiveness compared with the main European rivals at 30 percent. The challenge is not insurmountable, but it is unprecedented.”
The president is heading for trouble
Macron has made an unwise move, L'Opinion believes:
“Friday's announcement that the state would take on 35 billion euros in debt from the SNCF - 25 billion by 2020 and 10 billion in 2022 - will certainly not help the government keep its promises. The prospect of lowering state debt to 91.4 percent of GDP by 2022 is fading fast. 35 billion is almost half the amount separating France's national debt from the symbolic 100-percent mark. ... Hence it will be increasingly difficult to achieve a solid budget. To hold his course Macron will have to adopt a courageous stance on lowering spending, because the growth made possible by the reduction of the national debt in 2017 thanks to abundant tax revenues is slowing down.”