The International Monetary Fund calls on France to make substantial additional efforts to reduce its budget deficit

The International Monetary Fund calls on France to make substantial additional efforts to reduce its budget deficit
The International Monetary Fund calls on France to make substantial additional efforts to reduce its budget deficit

Despite the budgetary tightening already announced by the French government, the International Monetary Fund (IMF) judges that it is necessary to move up a gear. Otherwise the deficit – estimated at 5.3% of gross domestic product (GDP) in 2024 by the Washington institution – would only decrease “modestly” in the years to come, and would still reach 4.5% in 2027. Far from Bercy’s projections, which announces a return of the deficit below the fateful mark of 3% of GDP on this date. Indeed, underlines the Fund, “the main review and expenditure savings measures underlying the planned adjustment remain to be identified”.

The IMF scenario is also based on less optimistic macroeconomic assumptions than those of the government: the institution forecasts growth of 0.8% in 2024 for France – compared to 1% according to Bercy – and 1.3% in 2025 where Paris is counting on 1.4%. As for inflation, it should stand at 2.3% and 1.8% on annual average respectively for 2024 and 2025.

These conclusions come from a report published Thursday, May 23, resulting from consultations carried out under “Article IV” of the IMF statutes; it stipulates that the Fund “exercises firm surveillance over the exchange rate policies of member states”. Its recommendations are based, underlines the institution, “on a scenario with unchanged policy, which only includes measures adopted and clearly documented”. A way of saying that measures simply announced, but not specified or implemented, are not taken into account in budgetary projections.

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In an opinion made public on April 17, the High Council of Public Finances (HCFP), had already deplored the lack of “credibility” and of ” consistency “ deficit reduction scenarios envisaged by the government between now and 2027.

For the IMF, it is from this year that the executive must increase the budgetary discipline effort, by identifying savings items “adequately specified and credible”. “For 2024, new additional measures of around 0.4% of GDP will be needed to reduce the deficit to 4.9% of GDP,” specifies the institution.

Strong reaction from Bruno Le Maire

The measures announced in the stability pact in April, representing around 0.3% of GDP, “we speak for [l’année 2024] a difference of 0.1% of GDP in additional savings, which is not very significant”conceded, during the presentation of the report, the head of the IMF mission for France, Manuela Goretti.

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