The International Monetary Fund (IMF) has told France it must take additional steps to curb deficits if it is to reach targets set out by the government for the next two years, the French Finance Ministry said Wednesday.
The powerful IMF, which is headed by former French Finance Minister Christine Lagarde, also indicated that French economic growth targets for 2012 are not likely to be met.
Growth in 2011 is expected to be just above 2.0 percent, but the French economy is likely to slow down and expand by only 1.9 percent in 2010, a lower rate than the government’s growth target of 2.25 percent.
The IMF cited “progress” in some areas of fiscal policy but said “more efforts might be needed to reach” the targets for the next two years.
Since the 2008-2009 financial crisis and subsequent recession, France has been increasing its deficit spending and also its overall debt to levels well above agreed European Union (EU) benchmarks.
The national debt is now above 85 percent of Gross Domestic Product (GDP), while EU rules restrict this to 60 percent of GDP. France owes an estimated EUR 1.6 trillion (around USD 2.1 trillion) in national debt.
France’s budget deficit is also almost double the 3.0 percent of GDP level set out by the EU for countries in the Eurocurrency zone.