The government said it would seek parliament approval for €7.2 billion ($9.08 billion) in extra taxes this year. The plan calls for higher taxes on dividends and oil companies while an increase in France's wealth tax is expected to yield €2.3 billion, the government said.
Euro Zone by the Numbers
The 17-nation euro zone is a collection of countries with vastly different economic profiles. See how they stack up on the major measures.
The aim is to contain budget deficit at 4.5% of gross domestic product, even as the government now expects economic growth of 0.3% this year, below the 0.5% that Mr. Hollande had couched in his election program. Budget deficit came in at 5.2% last year.
Mr. Hollande's decision to amend the 2012 budget six weeks after taking office highlights how the new Socialist government is determined to meet deficit-reduction targets without taking steam out of the economy.
In contrast, other euro-zone countries caught in the sovereign-debt crisis, such as Italy and Spain, have been forced to cut spending sharply after they were virtually shut out of debt markets. As the result of these policies, both Italy and Spain have descended into recession.
Mr. Hollande's plan "is good to preserve growth in the short term," said Dominique Barbet, a Paris-based economist at BNP Paribas. "But the real challenge for France is to cut spending."
The French government said it would cut 2012 spending by €1.5 billion by freezing some spending allowances. The French parliament, where a Socialist-led coalition has a majority, is expected to approve the government's budget amendments in the coming weeks.
A tougher approach to spending will come from next year onward, the government said. Over the period 2013 to 2015, the head count in the civil service will be frozen overall and ministries will be asked to cut their operating costs by 7% in 2013 and 4% a year thereafter.
According to the proposed budget amendments outlined on Wednesday, budget deficit will fall to 3% next year. Reaching this target will require about €33 billion in extra measures—preferably spending cuts—in 2013, France's national audit office Cour des Comptes said earlier this week.
Since Mr. Hollande was elected in May, the economic outlook for France, the euro zone's second largest economy, has deteriorated significantly, with the latest growth figures showing stagnation in the first quarter of this year. Public debt has shot up to nearly €1.8 trillion, or 90% of annual output, while unemployment has gone over 10%.
"For several months the new government has been preparing to confront an extremely difficult economic, financial and social situation," French Finance Minister Pierre Moscovici said at a briefing on Wednesday.
Mr. Hollande's budget policy is being closely watched by Europe's main paymaster, Germany.
France and its southern European allies scored an important victory at a EU summit last week, where the continent's leaders agreed to several measures—including provisions to recapitalize banks and to help some governments rein in their spiraling borrowing costs—at the expense of German Chancellor Angela Merkel.
Yet, to preserve his political capital in the euro zone, Mr. Hollande is determined to make good on his pledge to reduce the budget deficit, French officials said.