Merkel says France reforms on 'right track'

(BRUSSELS) - German Chancellor Angela Merkel said Wednesday that French economic reforms put the country on the "right track" after Paris won a two-year delay from the EU to get its budget deficit back within Brussels limits.

"I think France is very much on the right track," said Merkel, as Germany, Europe's paymaster, has insisted the EU's fiscal rules must be respected to ensure growth and sound public finances.

"We are going to be working very closely with France in support of these efforts," she added when asked about France's third deadline delay after talks with European Commission head Jean-Claude Juncker.

Last week, the Commission set France tough new savings targets in return for giving it until 2017 to get its budget deficit back below the EU ceiling of 3.0 percent of annual economic output.

Paris will also have to submit regular progress reports as Brussels exercises its new powers to oversee member state budgets.

French President Francois Hollande said separately Wednesday his government would find four billion euros in "new savings" this year to meet the deficit reduction demands from Brussels.

"If Brussels asks for four billion euros more to respect our obligations in reducing the public deficit, they will be found with new savings," Hollande said in an interview with daily Le Parisien.