France Faces Fiscal Challenges: IMF Urges Budget Reforms

The International Monetary Fund (IMF) has called for France to intensify efforts to manage its budget deficit and burgeoning debt, as highlighted in its annual review of the French economy on Thursday.

After a surge in public spending and lower-than-expected tax revenue, exacerbated by a fragmented legislative election outcome, the French government is grappling to stabilize its finances. While the IMF anticipates the French government will achieve its 2025 public sector budget deficit target of 5.4% of economic output, it warns that without further measures, the deficit may remain near 6% in the medium term.

To address these fiscal challenges, Finance Minister Eric Lombard emphasizes controlling public spending as a top priority. The government seeks to implement €40 billion in budget savings to reduce the fiscal deficit to 4.6% of economic output next year, although support for these measures remains politically divided.

(With inputs from agencies.)