IMF urges France to intensify efforts to cut debt
France is on track to meet its targeted lower deficit this year, but it will need to take additional substantial measures going forward to address its growing debt, according to the International Monetary Fund.
In its Article IV review, the Washington-based institution said the country’s shortfall gap is on track to narrow to the government’s target of 5.4% of economic output this year. It forecast growth just 0.1 point shy of the 0.7% in the public finances law, News.Az reports citing foreign media.
France’s deficit will still remain around 6% of economic output in the medium term if no further action is taken, the IMF added, urging further moves to repair the public finances. The government has pledged to reduce the gap to 3% by 2029.
“Significant additional fiscal efforts will be crucial to preserve fiscal space and create room to absorb rising spending demands, while placing debt on a downward path,” the IMF said.
France is still reeling from a political crisis that prompted the collapse of the government at the end of last year and left the country without a full budget for the first months of 2025. A new cabinet led by Prime Minister Francois Bayrou got a financial plan through parliament in February, but with a smaller consolidation than previously planned.
The finance ministry has said it will need around €40 billion of additional savings to further reduce the deficit to 4.6% next year. But ministers must still negotiate with a National Assembly where they have no majority and are vulnerable to no-confidence votes that could bring down the government.
The IMF said France has little room to raise taxes, with the level of taxation already among the highest in Europe. The institution said policymakers should instead focus on rationalizing spending at all levels of government.
“I welcome the IMF’s analysis, which underlines the credibility of our current efforts to reduce the deficit and our economic forecasts,” Finance Minister Eric Lombard said. “Controlling our public spending is key for our future — it’s our priority and compass in the construction of the 2026 budget.”
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