The euro zone's second-largest economy has repeatedly missed fiscal targets and its 4.4 percent public deficit-to-GDP ratio goal, even if respected, will be higher than initial pledges.

But with France under scrutiny from the European Commission ahead of an EU decision in March on its fiscal slippages, Paris will be keen to show that it has cut spending and that its latest target has been met.

Preliminary finance ministry figures published on Thursday showed state spending dropped by 3.3 billion euros in 2014 compared to 2013, excluding debt and pension costs.

"It's the first time in such a significant way that the control and cutting of state spending has been translated into acts," Sapin told Reuters by phone.

"Everything at this point provides comfort for our forecast for a public deficit in 2014 of 4.4 percent of GDP," he added.

European Economic Affairs Commissioner Pierre Moscovici, who is tasked with drafting the EU executive's recommendation on France's budget, said later on Thursday that he was hoping for a compromise rather than sanctions.

"The dialogue with the French authorities is respectful and I hope it will reach a satisfying compromise in the next few weeks," he told a group of reporters and diplomats in Paris.

"It is always better to convince a country (to make reforms) than to try and intimidate it or punish it," he said.

He said that the European Commission's priority was growth and jobs and that it would apply budget rules "with discretion."

Paris could theoretically face a fine of up to 4.2 billion euros but the European Commission said this week that public investment and detailed plans for structural reforms could win some leeway for countries breaking EU budget rules, reducing the likelihood of tough penalties.

A draft French bill to open up closed professions and cut red tape "is a step in the right direction and answers some of the (EU's) demands," Moscovici said.

Thursday's data showed that revenue also dropped last year, and the state deficit, which makes up only part of the country's overall public budget deficit scrutinised by Brussels, stood at 85.6 billion euros in 2014 against 74.9 billions of 2013.

The shortfall was however 3.4 billion euros lower than estimated in a revised budget law at the end of last year.

Paris has pushed back to 2017 its ambitions to meet the EU target of cutting the public deficit to 3 percent of GDP.

($1 = 0.8480 euros)

(Writing by Leigh Thomas and Ingrid Melander)

By Jean-Baptiste Vey and Ingrid Melander