EDITORIAL

When its scope was extended under the Health Insurance Act of August 13, 2004 , CADES responded by stepping up its issue program to accommodate an additional 50 billion euros in debt, including 15 billion euros related to the forecast deficit for the 2005-2006 period. Including the supplemental payments made to Social Security funding organizations (€2.9 billion) in 2003 and 2004, this latest additional amount—which follows sums assumed in 1996 (€46.1 billion) and in 1998 (€13.2 billion)—brings the total “voted debt” entrusted to CADES to 110.4 billion euros. Of the total, a amount of 92.4 billion euros had actually been transferred to CADES on December 31, 2004 (see graph below). A final 3-billion euro payment to the State has yet to be made, and the aforementioned 15 billion euros in projected deficit has not yet been assumed.

Since it was founded in 1996, CADES has amortized 26.6 billion euros in capital and paid 12.6 billion euros in interest for a total payoff of 39.2 billion euros. Financial statements for year-end 2004 showed a net deficit position of 65.7 billion euros, a figure that provides an initial rough estimate of total debt issued. To this end, its framework has been strengthened by the decision to no longer subject the dedicated CRDS tax, its principal source of revenue, to time limits. After reaching 4.9 billion euros in 2004, the CRDS tax is expected to provide revenue of 5.08 billion euros in 2005. As a reminder, CADES will have completed its entrusted remit when the total debt has been repaid.
Since the beginning of this year, CADES has consolidated its reputation as an issuer of the first rank. After raising a total of 41 billion euros in the markets in 2004, the agency is poised to issue debt totaling 38.7 billion euros this year. This issuance program is being rolled out under excellent financing conditions—in particular, the very low level of the euro yield curve and strong interest in CADES issues on the part of investors from Europe , Asia and the Middle East . CADES is using a broad array of refinancing tools and currencies, while also giving preference to benchmark bonds in euros traded via the electronic markets (MTS), inflation-indexed notes (CADESi), and private placements.

CADES has consistently demonstrated its efficiency as a vehicle for paying down entrusted social security debt since it was first founded.

Due to the one-off contribution of 1.097 billion euros that CADES made to social security funding organizations and the payment of 3 billion euros to the French State , the financial statements for the year ended December 31, 2004 showed a deficit of 752 million euros. This is a 235-million euro improvement over the previous year. Once these exceptional payments are completed, the last being planned for 2005, CADES expects to show a significant surplus.

In 2004, CRDS revenue totaled 4.896 billion euros, compared with 4.721 billion euros one year earlier.