IMF calls for consistent French budget cuts to reduce deficit

On Thursday, the International Monetary Fund (IMF) released its annual review of the French economy, stating that the country needs to bring its growing debt under control and make significant efforts to contain the budget deficit.

The organization expects the French government to achieve the 2025 budget deficit target of 5.4% of GDP. However, the IMF warned that, without additional measures, the shortfall will remain at around 6% in the medium term and the debt will continue to grow.

The IMF said that France requires a credible and well-designed package of measures aimed at rationalizing of spending and distributing social benefits more efficiently. Additionally, the country will require budget cuts equivalent to 1.1% of GDP in 2026, followed by an average of approximately 0.9% of GDP per year thereafter. Many of the measures proposed by the current government of Francois Bayrou have not found support in parliament, according to Reuters.

The IMF forecasts that the eurozone's second-largest economy will grow by 0.6% this year and by 1.0% in 2026. These estimates are less optimistic than the government's projections of a 0.7% increase this year and a 1.2% expansion in 2026.