By Ingrid Melander and Emmanuel Jarry
PARIS (Reuters) - France's new budget minister said on Wednesday he would stick to the spending cuts planned by his predecessor, whose sudden resignation in a tax fraud investigation threw an unwelcome spotlight on the country's fiscal dilemma.
Jerome Cahuzac, whose job was to find ways of reining in public spending without cramping stagnating growth, quit on Tuesday over allegations he hid undeclared income in a secret Swiss bank account. He denies any wrongdoing.
His successor, former Europe Minister Bernard Cazeneuve, said he would stick to Cahuzac's fiscal program.
The revised multi-year plan must be drafted in time to put it to parliament by mid-April, with an extra 5 billion euros ($6.5 billion) in savings for 2014 on top of a 60-billion-euro spending cut target set for the government's five-year term.
France cannot afford to stray from its savings pledges as it is trying to win support from its EU partners to get a one-year reprieve on bringing its budget deficit below 3 percent of GDP. The European Commission has made structural reforms and staying close to the deficit target a condition for leniency.
The task will be difficult for a Socialist government and parliament uncomfortable with imposing further belt-tightening.
They are trying to boost growth, seen flat at best this year, and face an electorate already worn down by spending cuts and an unemployment rate at a 13-year high.
"I will assure policy continuity," said Cazeneuve, a soft-spoken, 49-year-old Socialist veteran who was one of Francois Hollande's spokesmen during his 2012 presidential campaign.
"There can be no growth without discipline in public accounts. There can be no growth if we do not rein in our deficits and debts, and the role of the budget minister is to channel these budgetary efforts towards growth."
Weaker-than-expected growth forced the government last month to abandon its pledge to cut the public deficit to an EU-imposed ceiling of 3 percent of economic output this year and to seek EU blessing to push the target back to 2014.
"There will be little or no downtime (for Cazeneuve)," said Christian Eckert, lead lawmaker on the budget.
TOUGH ACT TO FOLLOW
Cahuzac's resignation adds to growing political woes for Hollande and his government with his ratings at a record low after less than a year in office.
Hollande's government faced a censure motion in parliament on Wednesday brought by the conservative opposition eager to cast the cabinet as not up to the task of reviving the economy.
Though the motion failed because the Socialists and their allies have a majority in the lower house, it nonetheless brought the government negative publicity.
Analysts said Cahuzac, known for resisting his colleagues' spending demands, might be missed when it comes to implementing unpopular cuts, but they did not expect the 2-trillion-euro economy - No. 2 in the euro zone - to change its fiscal policy.
"There are strong enough commitments by the president, the prime minister and (Finance minister Pierre) Moscovici," said Gilles Moec, European economist at Deutsche Bank.
"I don't think we'll see any change of course. But the implementation of the reforms could be more difficult because Cahuzac was a heavyweight," Moec said.
As far as talks on the EU deficit target are concerned, the resignation should not change significantly as Moscovici is the European Commission's main interlocutor, an EU official said.
The yield on the French 10-year benchmark bond was hardly moved after Cahuzac quit at just above 2 percent.
(Additional reporting by Nick Vinocur and Elizabeth Pineau in Paris, Jan Strupczewski in Brussels; Editing by Louise Ireland)
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