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France to

issue cades

decree next

week

PARIS: The French government will publish a decree to set up the Cades Fund designed to repay French accumulated welfare debt next week, a source close to the operation said on Friday.

The Caisse d'Amortissement de la Dette Sociale fund must raise 140 billion francs by the end of June.

"Things will speed up" with the setting up of the fund and nomination of its president, who will also to be appointed next week, the source told Reuters. "Nothing is possible before then," the source added.

Formal proposals could only be made to French primary dealers and financial institutions about how to raise the money when the fund had been set up by decree and the president named.

A British newspaper report said a bidding process had started yesterday.

The government announced it would set up the fund last November as part of its social security reforms to help pay off 230 billion francs of welfare debt run up between 1992 and 1996.

The Treasury wrote to about 20 financial institutions in January to seek their ideas on how to finance the fund and asked for responses by February 7.

"It's all still speculation," said the head of a syndication desk of a primary dealer in Paris.

The Treasury letter said it would consider issuing bonds in a range of maturities so funding would not be concentrated in one area.

French finance minister Jean Arthuis said in March at least some of the fund was likely to be issued on foreign markets.

"The Treasury is making us wait," said another primary dealer in Paris.-Reuter