The head of the International Monetary Fund said on Wednesday that it will “take time” for France to reduce its debt to an extent that restores “confidence” in the major European economy.
“France is currently aiming to get a budget that would put deficit and debt on a downward trajectory,” Managing Director Kristalina Georgieva said at a press conference during the Annual Meetings of the IMF and the World Bank in Bangkok.
However, she said, “it would take time before it could come down to levels that are providing confidence — full confidence — to people and to the investor community”.
A draft budget currently being debated in France’s National Assembly seeks to bring the country’s towering deficit down to five percent of GDP next year.
Its adoption appears highly uncertain due to a lack of a parliamentary majority and next year’s looming presidential election.
President Emmanuel Macron’s centrist government is anxious to pass a budget before the end of the year as it looks to reassure markets that France can bring down its debt mountain.
Opposition parties on the left and right oppose the government proposals, while there is mounting public anger over spending cuts.
On Tuesday, France’s economy minister, Roland Lescure, denied the country was wound up in a debt “snowball effect”, urging opposition parties to pass the budget.
The comments on France by the IMF chief come as officials and experts gather in the Thai capital to discuss the wide-ranging challenges facing the global economy.
In addition to soaring government debt, other hurdles include prolonged conflict in the energy-rich Middle East and concerns about the durability of a recent boom in artificial intelligence.
Like France, many advanced economies are suffering from huge government debt that has sent US Treasury bond yields to multi-decade highs in recent weeks.
The trend spurred Georgieva to issue an appeal on Wednesday for policymakers to make “urgent repairs to the fiscal house before the cracks widen”.
“Now is the time to enhance revenues, to rationalise spending and improve public financial management.”
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