Long a leading offender of EU fiscal rules, France is set to become a shining example of sound budget management when its EU partners drop action against Paris over its public finances.

The highlight of a monthly meeting of EU finance ministers is expected to be the end of sanctions against France that were put in place in 2003 after its public deficit broke EU rules the previous year.

Under EU limits, member states are supposed to keep their public deficits to less than three percent of gross domestic product, but France, Germany and other member states have repeatedly broken that rule.

Germany, which has also struggled to bide by the EU's fiscal rulebook, is expected to follow soon in France's footsteps after wrestling its deficit down to the EU limit faster than expected.

"The end of the procedure against France, and soon, against Germany is important," EU Economic and Monetary Affairs Commissioner Joaquin Almunia told AFP.

"It will give a good example for the rest of the eurozone and the EU in general.

"In particular it will encourage new member states in their efforts to respect the criteria that will allow them to join the eurozone," he said.

The European Commission, which polices members' finances, deemed France in November to no longer be a deficit miscreant after finding that the 2005 fiscal shortfall came in at 2.9 percent and was expected to keep falling.

At the French finance ministry, an official said "a page is turned" with the lifting of the deficit action against France, which consisted of a legally binding commitment to improve the public finances.

Like the other countries sharing the euro, France faced hefty fines if it broke the three-percent limit too long and ignored its commitments, although none of the 13 countries has yet met that fate.

After struggling to meet the three percent rule, France and Germany spearheaded efforts to revise the treaty in which it is written -- the Stability and Growth Pact.

Following long and difficult negotiations, they convinced fellow EU members to agree in 2005 to water down the beleaguered pact, which some private economists and the European Central Bank considered a brutal blow to budgetary discipline.

The revised fiscal rule book gives countries more leeway to run deficits over three percent limit during weak economic growth although they are required to not lose sight of the target over the medium term.

Despite concerns at the time that the revision would give finance ministries carte blanche to overspend, most countries, and especially France and Germany, have substantially cleaned up their finances since then.

Germany has made such progress on improving its finances that it is a year ahead of the timetable imposed by other EU members for Berlin to cut its deficit to less than three percent.

The German government is estimated to have brought its finances in line with the three percent rule last year by running a deficit of only 2.1 percent of output.

Tuesday's gathering is to be preceded by a meeting of eurozone finance ministers on Monday, when they are due to take the pulse of their combined economy.

Amid signs that an increase in the German value added tax this month has had less impact than expected, Almunia said earlier this month that economic growth would slow slightly this year after a particularly strong performance in 2006.