IMF Warns France of Escalating Fiscal Risks as Budget Deficit Remains High
IMF Assessment of France's Fiscal Situation
PARIS, May 21 (Reuters) - France faces mounting public finance risks as budget-tightening lags and debt remains high, the International Monetary Fund said on Thursday, warning that insufficient efforts could leave the country vulnerable to market pressure and future shocks.
Current Deficit Trends and Implementation Risks
Concluding an annual staff visit to the country, the IMF said the public budget deficit fell to 5.1% of GDP in 2025, but efforts to further rein it in were proceeding more slowly than planned and faced "significant implementation risks".
Government Goals and Political Opportunities
With current policies unlikely to meet the government's goal of reducing the deficit below 3% by 2029, the IMF said in a statement that a presidential election next year offered an opportunity for a more credible reset.
Long-Term Debt Concerns and Spending Pressures
Without additional measures, debt would stay elevated and increase the risk of more painful cuts later. The fund added that rising spending pressures from an ageing population, defence and energy transition further strained already high public spending, which reached 57.5% of GDP last year.
Economic Growth Outlook
Growth remains modest, with the economy expected to expand by 0.7% in 2026 after growing 0.9% in 2025, weighed by geopolitical tensions and domestic political uncertainty ahead of the 2027 election.
IMF Recommendations for Fiscal Stability
Multi-Year Strategy and Structural Reforms
To contain risks, the IMF called for a credible multi‑year strategy combining spending restraint and structural reforms, including to the pension system, tighter unemployment benefits and more efficient health and education spending.
Pension Reform and Political Challenges
Pension reform is likely to be a major battleground in the 2027 election after the government suspended a 2023 increase in the retirement age last year as a concession to get the budget adopted.
(Reporting by Leigh Thomas; Editing by Alex Richardson)
