We will keep our European commitments in terms of public deficits, says the French leader

PARIS: French President Jacques Chirac made cutting huge public debt a priority for 2006, announcing plans on Tuesday to create a new spending watchdog. He also called for measures to make hiring workers easier.

In a broad New Year's address to his Cabinet, the conservative leader also said he wanted to fight crime and insecurity, and improve economic opportunities for those French on the margins of society.

Mr. Chirac said he placed ''the greatest importance'' on a national conference on France's public debt to be led by Prime Minister Dominique de Villepin later this month. Mr. Chirac also urged the creation of an advisory council on public spending.

He did not provide specifics, but promised to elaborate over the next few days - during two weeks of New Year's greetings to the media, government officials, religious groups and others.

Daily Le Monde, without citing sources, reported the plan would index companies' health care fees, family allocations and other state charges on corporate profits, not the total wage bill - as is currently the case. It could save $23 billion a year for the state, but could penalise innovative, high-growth companies, the paper said.

Mr. Chirac said he wanted the Cabinet ''to reform financing of our social protections, to make it more favourable to hiring in France,'' without specifying.

Deficit limit

France has broken the European Union's public deficit limit - 3 per cent of gross domestic product - for three consecutive years and is in breach of a E.U. rule requiring Governments to keep their accumulated debts below 60 per cent of GDP.

A government-commissioned panel said last month that public finances are in a ''very worrying'' state, with a fivefold increase during the last 25 years.

Mr. Chirac warned that swelling public debt could endanger state-financed projects in the future, saying the state must find new means of financing to overcome a ''vicious circle of debt'' in France.

''We will keep our European commitments in terms of public deficits,'' Mr. Chirac said.

With his second term set to expire next year - and polls showing few voters want him to run again - Mr. Chirac pressed Ministers to focus on their jobs, and shun premature politicking. ''Today, our honour, our demand is to redouble our efforts in the service of the country,'' he said. ''It's to show we are united and together in action.'' Shortly after Mr. Chirac spoke, the Cabinet approved the lifting of a state of emergency imposed during three weeks of rioting and arson across the country, a Minister confirmed. The order was to take effect Wednesday, ending the emergency measures more than six weeks earlier than originally planned. - AP