For the international institution, this reform should actually contribute to improving the situation.
France must begin to restore a decent aspect to the curve of its public finances and, for this, implement reforms which ensure a reduction in expenditure over the long term, recommends the IMF in a report published on Monday. A coincidence of the calendar which falls rather well, while the Minister of Labor, Olivier Dussopt, presented the new rules of unemployment insurance.
Because, for the international institution, this reform must actually contribute to improving the situation. “ Introducing counter-cyclicality in unemployment benefits by varying eligibility and/or duration of benefits based on labor market conditions would strengthen (…) labor market incentives while generating cost savings“, says the report. This development – now largely on track – is of course not the only one cited by the IMF. At the top of the list is still pension reform. A reform “which should improve the participation rate of older workers by gradually increasing the effective retirement age, improving the fairness and sustainability of the system, while taking into account specific situations“, insists the report, as every year. He also cites, as a source of savings, the reduction of tax loopholes.
Explosive bill
But above all, the IMF believes that it is time to put an end to the “ no matter what “, at work to support households and businesses during the Covid crisis first, to counter the inflationary effects of the energy crisis then. The government’s initiatives have certainly made it possible to contain the rise in prices oftwo to three dotsBelow the level it would have reached without aid measures, recognizes Jeffrey Franks, the IMF’s mission chief for France. We have “the lowest level of inflation in Europe thanks to the tariff shield“, added the Minister of the Economy, Bruno Le Maire.
But all of this – electricity and gas price freezes, energy vouchers, fuel price rebates, business support – came at the cost of an explosive bill for the state. Over the last year alone, the IMF has calculated it at more than 2% of its GDP. According to data from Bercy, some 110 billion euros were committed between 2021 and 2023.
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In short, the response to the energy shock “managed to cushion its economic impact, but is very expensivesums up the IMF. It is therefore “justified to start fiscal consolidation in 2023“. However, this is not the path that Paris is taking, by not providing, by this deadline, for a reduction in the deficit – it would reach 5% of GDP after 4.9% this year. For next year,gas and electricity price readjustments remain modest“, notes the Washington institution, pleading for better targeting of the most affected people, but also evoking, if necessary, a “deferral of production tax cuts“. “We will tackle the public finance curve as soon as inflation has come down“, we answer Bercy. More broadly, the IMF notes that Paris does not aim to return below the 3% mark before 2027, a longer horizon than that of most of its European neighbors.
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