The end of “whatever it takes” in 2023? The IMF calls on France to tighten its fiscal policy – ​​RT in French

The end of “whatever it takes” in 2023? The IMF calls on France to tighten its fiscal policy – ​​RT in French
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The IMF believes that France must put an end to “whatever the cost” to avoid a deterioration of its public finances. To offset the cost of the health and energy crises, he proposes to reform pensions and unemployment insurance.

“We supported ‘whatever it takes’, but it’s time [d’y mettre un terme]“, Estimated this November 21 during a press conference Jeffrey Franks, head of mission of the International Monetary Fund (IMF) for France, quoted by AFP.

“It is not a question of stopping all support for the economy, [mais] more targeted support [ménages et entreprises]without degrading public finances”, he added, commenting on a report published in the morning by the IMF.

France has increased spending, to more than 2% of its GDP

Through the freezing of electricity and gas prices, energy vouchers, discounts on fuel prices or even support for businesses, France has increased spending over the past year, estimated by the IMF at more than 2 % of its GDP. According to the head of the IMF for France, these measures have made it possible to contain the inflation rate “two to three points” below the level it would have reached without aid measures.

But these exceptional expenses have also weighed on public finances already very degraded by the Covid-19 pandemic. During this, the government notably financed partial unemployment and the closing of businesses, under “whatever the cost”.

In the conclusions of an economic assessment mission of France, the IMF considers that “it is justified to start budgetary consolidation in 2023” – in other words, to start reducing the budget deficit and the debt from the year next. However, this is not the path that Paris is taking, notes the Washington institution, noting that “the 2023 finance law does not target a reduction in the deficit, postponing the budgetary adjustment to 2024”.

The government is indeed planning a public deficit equivalent to 5% of gross domestic product (GDP) next year, after 4.9% this year, and plans to return below the 3% mark in 2027, where its big neighbors betting on a quicker return to this level.

“Slight widening of the deficit” in 2023

In its document published on 21 November, the IMF is still counting on growth of 0.7% next year in France. But the institution fears “a slight widening of the deficit” in 2023, citing the extension of energy measures and the abolition of production taxes for companies.

However, according to IMF calculations, targeting energy aid could “largely” allow for fiscal tightening of a quarter of a point of GDP. Other avenues for reducing public spending, according to the IMF: pension and unemployment insurance reforms, as well as the reduction of tax loopholes.

To reduce public spending, the local head of the IMF also recommends “clarifying who takes care of what” between government and local authorities. “We see a lot of duplication of spending between central government and local governments [collectivités locales]“, he assures.

In the longer term, the IMF estimates that the French deficit should remain above the level at which the debt stabilizes.

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