Posted on Feb 16, 2019 2021 at 16:25Updated Feb 16, 2019 2021 at 16:33
What is the point in hastening to repay the “Covid debt” if it is to accumulate new current account deficits and ultimately new debts? In a note published Tuesday, the High Council for the financing of social protection opens the debate, while waiting to deepen it in its March report.
The formulation is cryptic: “The question of the link between the timing of debt repayment social security and the return to balance of current accounts appears […]as a major issue ”, he explains, in conclusion of his inventory of social accounts. In dotted lines, the High Council questions the government’s choice to extinguish the social debt amortization fund (Cades) in 2033, after having reimbursed the 136 billion euros in social deficits whose transfer was voted in the summer latest.
Among these current and future transfers, 92 billion euros are directly due to the Covid epidemic and its consequences, over the period 2020-2023. But we must expect a heavier burden: « In view of the trajectories voted in the framework of the Social Security financing law for 2021, this quantum turns out to be insufficient to cover the deficits anticipated over these four years (132.7 billion euros), and even more if we take into account the possible deficit of 2024 (20.2 billion euros), and the probable deficits which will be observed over the following years, while the strategy of returning to balance bears fruit ”, points out the High Council.
A recovery of more than ten years
Each year, to amortize the debt entrusted to it, Cades consumes 18 billion in socio-fiscal revenues (CSG, CRDS, payment from the pension reserve fund). These could also be used to replenish the current account of Social Security, especially in a context of economic crisis.
Especially since the financial recovery should be extraordinarily long, with a Social Security deficit estimated for 2020 at 50.7 billion euros. By broadening the focus to all Social Security administrations (with complementary insurance and unemployment insurance), social deficits would even amount to 72 billion euros in 2020, or 3.3% of GDP. “At the height of previous crises, the deficit excluding Cades had reached 1% of GDP in 1993 and 1.4% in 2010”, recalls the High Council. By integrating Cades, which has a structural surplus because the revenues allocated to it are always greater than its financial charges, this would still amount to 58 billion.
The untenable situation of unemployment insurance
Incidentally, the High Council is worried about the “Untenable situation” unemployment insurance, whose deficit (20.5 billion euros) represents one third of the total deficit, “While unemployment insurance spending represents 8.5% of spending” social administrations.
Supplementary pension plans would drop from a surplus of 3 billion in 2019 to a deficit of 5.1 billion in 2020, weighed down by Agirc-Arrco (-6.6 billion). The immediate solution for these schemes consisted in taking 12.7 billion euros from their financial reserves, the level of which fell by 8%.
As for Social Security, the deficit for 2020 is probably lower than expected, due to a smaller drop in GDP and the wage bill. But the outlook for 2021 has darkened: “The assumption adopted for the construction of these forecasts assumed the “End” of the health crisis at the time of the switch to 2021 “, underlines the High Council, which thinks that «lhe possible “good” surprises for the 2020 financial year could thus be partially offset by a more significant deterioration over the 2021 financial year ”.
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