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The rate of fiscal consolidation shared by the IMF

International Monetary Fund leaders repeated their support for reforms undertaken by the French government and encouraged it to decrease debt again, but without agreeing on the speed required for fiscal restructuring.

In the findings of its annual assessment of the French economy released on Wednesday, the IMF states that its directors “praised the officials for the advancement taken in promoting jobs and growth-friendly organizational changes over the previous year.”

At the same moment, however, they suggested “a continuous and growing restructuring attempt to decrease the deficit and place public debt on a strong descending path.”

“Several directors thought a major shift was necessary to restore shock absorbers and not to stop the accomplishment of the medium-term goals laid down by European Union regulations,” says the report.

“Several other directors, however, defended a more gradual consolidation,” saying that France had a budget margin that could be used in a crisis and should act with caution to support growth while preserving its sustainable character.

In the preliminary conclusions of its annual review of the French economy in early June, the IMF urged France to conduct an “ambitious structural fiscal effort” to allow the reduction of the tax burden to be sustainable over the long term. Putting public debt on a “downward” trajectory.

On the growth side, he notes that the French economy is showing resilience and, while lowering its forecasts for the global economy on Tuesday, it has not changed its expectations for France (1.3% in 2019 and 1.4% in 2020).

As for French public debt, it sees it rises to 99% of GDP this year before returning to 98.6% next year, where the government, which has revised down its ambitions on spending public with the measures taken to respond to the movement of “yellow vests” table for the moment on 99.0% in 2019 and 98.9% in 2020.

Source: Reuters

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