French Finance Minister Nicolas Sarkozy will press on with sales of state holdings despite threatened mass protests in the coming months, economists say.
Sarkozy needs to boost the economy without increasing spending in order to cut a huge public deficit that has repeatedly breached European Union limits.
An estimated 15-20 billion euros (18-24 billion dollars) could be raised from sales of state holdings this year, compared to four billion euros in privatisation proceeds pencilled into the 2004 budget.
"That amount seems perfectly attainable," said Emmanuel Ferry, chief economist at Exane in Paris last week. "The field of possibilities is very open, in both listed and non-listed companies."
The finance minister must nonetheless walk a fine line to avoid filling the streets with crowds hostile to painful reforms.
An operation to turn Electricite de France and Gaz de France into limited liability companies, the first step toward share sales to private investors, is now scheduled to take place before July rather than at the end of the year.
The plan has raised the ire of several EDF labour unions, which staged on April 8 their biggest one-day strike since October 2002 and promised further protests later this month and in May.
But strikes failed to derail the opening of France Telecom's share capital in 1997, which inaugurated one of the largest rounds of state corporate divestments of the 1990s.
And despite a massive defeat for the ruling UMP party in recent regional elections, the government has several years before it must confront voters again.
"Once the European elections (in June) are behind them, the electoral calendar will be empty until the big day, ie the presidential and general elections in 2007," said Eric Chaney, European economist at Morgan Stanley, in a recent research note.
"Since reforms such as privatisation's, civil service restructuring and labour market deregulation do not pay off in the short term, the sooner they are implemented, the better," he noted. A broad series of government sales would help Sarkozy meet France's commitment of bringing its public budget deficit to below three percent of gross domestic product (GDP) in 2005.
At the same time, privatisation's would lead to more listed companies on the French stock market, increasing liquidity and contributing to the government's aim of developing an equity culture, Ferry said.
Besides a sale of 30-40 percent of the jet engine maker Snecma that could raise up to two billion euros in the coming months, the privatisation of two highway toll operators, SANEF and SAPRR, are other likely short-term targets.
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