Sarkozy pledges to cut in deficit, sell reserves

In his first major economic policy speech since being named in late March, Sarkozy said: "We must ... respect in 2005 the commitment of a public deficit of less than three percent of GDP".

This year he said the government should not spend any more than the 283.7 billion euros (342.2 billion dollars) already budgeted.

In order to meet that target, he said that the government would push ahead with structural reforms of the public health systems and lowering the number of civil servants by not replacing all of those who retired, and with selling state assets.

The government would also sell offices belonging to the state and use the proceeds against the deficit.

After getting the Bank of France's approval, 500 to 600 tonnes of gold held by the French central bank would be sold. The bank would hold the proceeds but the interest from the money raised would go to the state.

The state would also sell 30 to 40 percent of the SNECMA airplane engine-maker by the end of June generating 1.6 to 2.2 billion euros and would sell stakes in highway operators SANEF and SAPRR by the end of the year.

Sarkozy said the proceeds from the operations would not be used for the state's current needs but to bring down the debt.