IMF warns France to cut debt, sees higher deficit
Published: 04:05 PM,May 23,2024 | EDITED : 07:05 PM,May 23,2024
PARIS: The IMF urged France on Thursday to take more measures this year to reduce its debt load, warning that the budget deficit will be sharply higher than forecast in 2027.
The IMF said in a statement that France's deficit will reach 5.3 percent of gross domestic product this year, slightly higher than the 5.1 forecast by the government.
But the Washington-based institution warned that France's budget shortfall will be 'significantly higher' than Paris foresees in 2027 -- the IMF forecast 4.5 percent instead of the 2.9 percent expected by French officials.
'Further consolidation measures are recommended over the medium term, starting in 2024, to bring debt on a downward trajectory, while making space for targeted growth-enhancing spending,' the IMF said at the end of a staff mission to France.
The statement follows warnings from ratings agencies that France needs to undertake additional spending cuts to meet its deficit target.
The government set a 'realistic and ambitious' goal in April to bring the deficit under the EU's three-percent limit, with 20 billion euros ($21.7 billion) in additional savings this year and another 20 billion euros in 2025.
'Despite ongoing growth-enhancing structural efforts, the macroeconomic assumptions underlying the government's plan might prove somewhat optimistic over the adjustment period,' the IMF said.— AFP
The IMF said in a statement that France's deficit will reach 5.3 percent of gross domestic product this year, slightly higher than the 5.1 forecast by the government.
But the Washington-based institution warned that France's budget shortfall will be 'significantly higher' than Paris foresees in 2027 -- the IMF forecast 4.5 percent instead of the 2.9 percent expected by French officials.
'Further consolidation measures are recommended over the medium term, starting in 2024, to bring debt on a downward trajectory, while making space for targeted growth-enhancing spending,' the IMF said at the end of a staff mission to France.
The statement follows warnings from ratings agencies that France needs to undertake additional spending cuts to meet its deficit target.
The government set a 'realistic and ambitious' goal in April to bring the deficit under the EU's three-percent limit, with 20 billion euros ($21.7 billion) in additional savings this year and another 20 billion euros in 2025.
'Despite ongoing growth-enhancing structural efforts, the macroeconomic assumptions underlying the government's plan might prove somewhat optimistic over the adjustment period,' the IMF said.— AFP