France received a warning from the International Monetary Fund (IMF). The IMF emphasized that the public deficit should be reined in from 2023 so that the debts in the country do not grow.
Underlining that the country, which froze gas and electricity prices due to the Russian war, alleviated the economic effects of the shock in energy prices by transferring cash to households and reducing fuel prices, the money fund said that these measures, which cost more than 2 percent of economic output in 2021-2022, have a high cost. stated.
For this reason, the IMF pointed out that the government should gradually remove price controls and focus on helping those who are most affected by the crisis.
How does France manage to keep inflation low?
Inflation hits record in France
The French government aims to keep the budget deficit constant at 5 percent of Gross Domestic Product (GDP) next year. However, while the IMF recommends fiscal tightening by a quarter point of GDP to Paris, it states that this can be done in part with better-targeted energy assistance.
In the report, which was called “Supports for the 2 crises and the epidemic whose impact has diminished, France needs to consolidate the public budget for 2023”, it was pointed out that Paris postponed reducing the budget deficit until 2024 instead.
Expecting a decrease in the deficit in the medium term, the IMF predicts that the debt burden will remain above the level that will balance the debt burden, and the gap with other European countries will widen.
While keeping the growth forecast for France at 2.5 percent for 2022, the IMF predicts it as 0.75 percent for 2023.
