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France vows to bring deficit down to 4.5 percent of GDP this year, as borrowing costs fall

France is vowing to meet its deficit-reduction target for this year despite offering billions of euros in financial guarantees to struggling companies and state agencies.

In a budget amendment Wednesday, the government says it remains on track to cut its budget deficit to 4.5 percent of the French economy's gross domestic product, largely thanks to falling borrowing costs that have saved the country €2.4 billion ($3 billion) this year.

President Francois Hollande's administration is staking its credibility on meeting a series of deficit targets. But France's waning growth has meant the government has repeatedly had to cut spending and raise taxes.

At the same time, it has provided lifelines to carmaker Peugeot-Citroen and the unemployment insurance agency.

The amendment also promises to save €1 billion by going after tax fraud.