The International Monetary Fund (IMF) said on Thursday May 23 that it anticipated a public deficit for France “significantly superior” to the government’s forecasts in 2027. “New fiscal consolidation measures are recommended in the medium term starting in 2024, in order to bring the debt back on a downward trajectory”writes the IMF at the conclusion of a mission to France called “article 4”.
This expects a public deficit of 4.5% of GDP in 2027 compared to 2.9% for the government forecast. This difference is due, according to the international organization, to the fact that “the main review and expenditure savings measures underlying the planned adjustment remain to be identified”.
For 2024, the IMF is counting on a public deficit of 5.3% of GDP, when the government is banking on 5.1%. The executive said in April that it was banking on an objective “realistic and ambitious” to come back below the deficit limit set by Brussels, relating in particular to a budgetary effort which represents 20 billion euros in additional savings in 2024 then another 20 billion in 2025.
Before the IMF, the High Council of Public Finances (HCFP), had already estimated that the forecasts for reducing the deficit by 2027 were lacking. “credibility” and of ” consistency “.
The rating for France
This IMF analysis comes eight days before the publication by the S&P Global agency of its rating for France, after the status quo of the Moody’s and Fitch agencies at the end of April. In its conclusions, the IMF adds that the macroeconomic assumptions made by the government “could prove (…) optimistic »at a time when France is banking on growth of 1% this year, higher than that of the main economic institutes, including the IMF which is counting on 0.8%.
Among its savings recommendations, the IMF insists on targeting unemployment benefits and support measures for workers and businesses or reforming tax expenditures. “In the absence of additional measures, debt would reach 112% of GDP in 2024 and increase by around 1.5 percentage points per year in the medium term”warns the IMF.
This level of debt “exposes the future development of public finances to an unexpected increase in financing costs or a decline in growth which would aggravate budgetary pressures”he adds.
Reduce the public deficit
How can we reduce the public debt, which has exceeded 3,000 billion euros? There is no shortage of proposals to fill the “hole” in public finances. Should we reduce spending by cutting budgets, or increase taxes, particularly those of the richest?
- “It is better to take downstream of production than upstream”, for Antoine Bozio, economist.
- “A general increase in major taxes like VAT or income tax would be a monumental mistake,” Alain Trannoy, economist.
- “The fight for fair taxation goes beyond just the economic dimension”, by Aurore Lalucq, European MP Place Publique.
- “Financing more efficient spending with revenues that are less destructive to prosperity is imperative,” by Antoine Levy, economist.
- “Corporate tax cuts over the last fifty years have boosted innovation and employment”, by Olivier Cardi and Romain Restout, economists.
- “There have been methods for decades to rigorously measure the impact of a policy”, by Marc Ferracci, Renaissance MP.
- “Our debt has become structural due to past deficits”, by Laure Quennouëlle-Corre, historian.
- “An increase in revenue of around 87 billion euros is possible”, by Jean-Noël Vieille, financial analyst.
- “We propose to make greater contributions to retirees, for reasons of economic efficiency and social justice”, by Julien Albertini, Arnaud Chéron, Xavier Fairise, Arthur Poirier, Anthony Terriau, economists.
- “Is it fair to ask those who start working today to repay in place of their parents? », by Jean-Olivier Hairault, François Langot, Jocelyn Maillard, Selma Malmberg, Fabien Tripier, economists.
- “A methodical review of public spending is necessary, in order to improve their quality”, by Jean Pisani-Ferry, economist.
- “France’s deficit is being used to justify public policies of budget cuts”, by Philippe Askenazy, economist.