SNCF debt: A gulf and many questions

SNCF debt: A gulf and many questions

Railway workers demonstrate in Lyon on April 13, 2018. – KONRAD K./SIPA
SNCF Réseau’s debt amounts to more than 46 billion euros.
Most of this debt comes from investments decided directly by the state.
Emmanuel Macron has committed to a partial recovery of this debt.

SNCF has been dragging its feet for years: the debt of SNCF Réseau, once again a topic of discussion during the railway reform. A chasm of 46.6 billion euros, which is widening visibly.

“Today the debt is increasing by 3 billion euros a year (…) it is a threat for the railway system” recognized late March Minister of Transport Elisabeth Borne, in an interview with 20 minutes . For you to see more clearly, you have summarized the three most important questions.

Where does this debt come from?

The answer is largely in three letters: TGV. “In the 1980s, the development of high speed led to a massive debt of the SNCF, said Léo Charles, lecturer in Economics at Rennes-2 University, and member of the Economists dismayed ( classified on the left ). Then, as the new LGV lines were built, the expenses became more and more massive “.

For exemple, the cost of construction a single kilometer of high-speed line varies from 5 million (for the Paris-Lyon line) to 19.7 million euros (LGV Mediterranean). Today, these heavy investments – decided by the State – represent about two thirds of the debt of SNCF Réseau. The financial efforts undertaken in recent years to renovate the network have also inflated the bill.

Why is it urgent to deal with it today?

Because the government, and many economists, deem it “unsustainable”. But also because the executive wants to transform the status of the SNCF. Measurement, already approved by the National Assembly will transform the existing “Epic” (public establishment of an industrial and commercial nature) into public limited company (SA).

“Today, the SNCF can borrow at moderate rates because the state supports it, says Leo Charles. But when you have the status of SA, if you keep such a large debt, the markets will lend you at less favorable rates, or will not lend you any more. For this economist, who recently published a critical note on the government rail project, “it is important to clean up the SNCF, but it does not necessarily go through a change of status. ”

What is the government’s plan?

For the moment, the executive talks about the vagueness on this issue. Edouard Philippe and Elisabeth Borne hold the same speech: the government will take its “responsibilities” on the debt once the SNCF has defined a new financial trajectory, to bring its accounts to balance. Only precision, brought by the Head of State during his interview Sunday : “From 1 January 2020, the State will gradually resume the debt.”

This caution can be easily explained. The recovery – even partial – of the SNCF debt, will mechanically inflate the debt and the public deficit. For example, if the government decided to take back 30 billion euros, the deficit would swell 1.5 points of GDP, which would make it over the famous bar of 3% imposed by Brussels. An overtaking that Paris would happily do, while France has just returned below this threshold in 2017 , and that Emmanuel Macron has publicly committed to reduce the public deficit .

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