The Director General of the IMF, assuring that she “understands” the difficulties of farmers who have been demonstrating for several days in Europe, particularly in France, was however concerned on Thursday to see States extend aid instead of carrying out a “necessary” budgetary consolidation. Speaking to the press, Kristalina Georgieva assured that she “understands, from a human point of view, (that farmers) face more difficulties and that it is not easy to do the work they do “.
‘It’s difficult to end support'”
But “if this puts governments against the wall and prevents them from doing what is necessary to strengthen economies, there may come a time when we might regret it.” The IMF has been insisting for several months that states, particularly the richest, gradually end the aid that had been put in place to support their economies during the pandemic, then in the face of shocks linked to the sudden rise in inflation and to the consequences of the Russian invasion of Ukraine.
Kristalina Georgieva has repeatedly highlighted the risk of seeing States face “the looming shocks” without having the necessary budgetary space, while debt rates have increased sharply in recent years. “I have spoken with a number of officials, particularly finance ministers, who recognize the need for fiscal consolidation, but also that it is difficult to end support,” she said.
The IMF advises to “look holistically at how to rebuild the necessary margins. Can you increase your income? Are you ensuring the quality of your spending? Is there anything more you can do?” “Governments are under enormous pressure to invest in competitiveness, in the green economy, in training and talents, for the digital economy, where will all this money come from? Debt service is increasing. Your support Public spending has increased for good reasons and you have pressure to continue spending,” insisted Kristalina Georgieva.
Farmer demonstrations in France and Germany in particular have led governments to increase the number of announcements. In France, in addition to the strengthening of the Egalim laws, which aim to prevent producers from bearing the brunt of the price war between distributors, and the reduction of various standards, the government announced emergency measures for some 400 million euros in total.