The chief economist of the International Monetary Fund, Pierre-Olivier Gourinchas, considered the French government’s forecast of a 2.7% budget deficit in 2027 “difficult to achieve” on Saturday, but warned of the dangers of too pronounced austerity.
The 2024 budget, the first part of which was approved in the National Assembly without a vote thanks to article 49.3 of the Constitution, must offer guarantees of budgetary seriousness. The text predicts a total of 491 billion euros in state debt, the current charge, and a public deficit of 4.9% of GDP this year, possibly 4.4% in 2024, large in the last few hours. Europeans.
The Ministry of Economy is committed to economic growth of 1% this year and then 1.4% in 2024. It plans to reduce the public deficit to 2.7% in 2027. The debt would remain stable at 109.7% of GDP in 2024, reaching 108.1% at the end of the five-year term.
“Additional effort is needed”
“With current policies”, the forecast of a budget deficit of 2.7% for 2027 “may be a little difficult to achieve” and “an additional effort would therefore be necessary”, estimated Pierre-Olivier Gourinchas. The 1.4% growth forecast was also considered “high” by the Higher Council of Public Finances. However, “it is not really about making big cuts” in spending, explained the IMF economist, inviting us to “raise the question” of additional spending and reforms.
The reforms undertaken by the Government “will bear fruit”, in particular by supporting employment and activity, but “unfortunately we will have to do a little more”, considered Pierre-Olivier Gourinchas.
The debt exceeded 3 trillion euros in the first quarter of 2023 and France plans to borrow a record amount of 285 billion euros on the markets in 2024.
On Friday afternoon, the rating agency Moody’s indicated that it had not updated France’s rating, which therefore remains at “Aa2”, one of the best possible, a decision that “testifies to the credibility” of the country, according to the Minister. of Economics Bruno Le Maire.
Source: BFM TV
