The President’s 3 Per Cent

Abstract

In a letter to his Prime Minister, the French President established the ceiling for the 1984 budget deficit at 3 per cent of the Gross Domestic Product (GDP). In this way, a limit was put on the contribution to the budget that was expected to come from borrowing and monetary creation, as a complement to tax revenue. This authoritarian measure was part of the monetary, and even monetarist, policy adopted by most western governments at the time. The creation of means of payment has thus taken its place as one of the legitimate resources of the State, along with taxes and borrowing and, like them, it is a kind of levy on the resources of the nation.