Economic growth of 1% this year, then 1.4% in 2024. This is the forecast from the Ministry of the Economy, deemed “high” by the High Council of Public Finances. Bercy plans to reduce the public deficit to 2.7% in 2027. Debt would then remain stable at 109.7% of GDP in 2024, reaching 108.1% at the end of the five-year term.
But the International Monetary Fund (IMF) tempers the optimism of the French executive. “Under current policies”, the forecast of a budget deficit of 2.7% by 2027 “will perhaps be a little difficult to achieve” and “therefore an additional effort would be necessary”, estimated this Saturday, October 21 on France Inter the chief economist of the IMF, Pierre-Olivier Gourinchas.
“The budgetary path that the government has planned is going in the right direction,” he explained, but “it seems to us to be going a little too slowly” and “we could do a little more”. The 2024 budget, the first part of which was adopted in the National Assembly without a vote thanks to article 49.3 of the Constitution, must provide guarantees of budgetary seriousness. The text provides for total state spending of 491 billion euros, excluding debt charges, and a public deficit of 4.9% of GDP this year, then 4.4% in 2024, well off the charts. Europeans.
To restore public accounts from 2024, the government has ruled out tax increases, focusing instead on growth and the end of exceptional support measures for households and businesses.
“We will have to do a little more” reforms
According to Pierre-Olivier Gourinchas, “it’s not really a question of making big cuts” in spending. The IMF economist invited people to “ask the question” about additional spending and reforms. Those undertaken by the government “will bear fruit”, notably by supporting employment and activity, but “we will have to do a little more unfortunately”, judged Pierre-Olivier Gourinchas.
Debt exceeded 3,000 billion euros in the first quarter of 2023 and France plans to borrow a record amount of 285 billion euros on the markets in 2024.
Friday October 20, the rating agency Moody’s indicated that it had not updated France’s rating, which therefore remains at “Aa2”, one of the best possible. The outlook remains stable, meaning the rating agency is not considering changing its rating on France’s debt at this time – and no further review is on its schedule.
“Moody’s decision to maintain France’s rating testifies to the credibility of the French sovereign signature,” reacted Bruno Le Maire in a statement sent to AFP. “It reinforces our desire to continue France’s debt reduction and to respect the trajectory defined by the President of the Republic, and materialized by the public finance programming law,” added the Minister of the Economy.