The International Monetary Fund (IMF) agrees with the French government. The institution supported the pension reform carried out by Emmanuel Macron, Monday, January 30, a text contested by part of the population.
Reform to stop indebtedness
Protest or not, the IMF notes the poor health of the French economy. As the management of the economic crisis in Europe further deepens the indebtedness caused by the Covid-19 pandemic, “sustained fiscal consolidation focused on expenditure will be essential to rebuild financial buffers and bring debt back into a trajectory firmly downward,” the IMF said in a statement.
For this, “the implementation of the unemployment insurance reform and the pension reform can offer part of this necessary adjustment”, affirms the Washington institution. Highly contested, the pension reform began to be examined Monday in the Social Affairs Committee of the National Assembly. It provides in particular for a decline in the legal age from 62 to 64 and a further extension of the contribution period, provoking the anger of the unions which are organizing a new day of mobilization on Tuesday.
Other avenues: tax loopholes, energy aid, etc.
The unemployment reform, adopted in November, is welcomed by the IMF, which adds that other budget cuts and reforms will have to come to complete it. Already in November, the institution had discussed ways to reduce public spending. Among them, the reduction of tax loopholes, or better targeting of aid granted to households and businesses to deal with the energy crisis caused by the war in Ukraine.
On the aid provided in response to repeated crises, the IMF thinks that French support has “made it possible to cushion the impact but has been costly, poorly targeted, and a source of distortions” and always calls for more targeted measures towards the more vulnerable. In November, he said he feared “a slight widening of the deficit” in 2023, citing the extension of energy measures and the continuation of the abolition of production taxes for companies.