France faces rising fiscal risks, IMF warns

PARIS, May 21 (Reuters) - France ‌faces mounting ​public ​finance risks as budget-tightening lags and debt remains high, the International Monetary Fund said on Thursday, warning that ‌insufficient efforts could leave the country vulnerable to market ⁠pressure and future shocks.

Concluding an annual staff visit to the country, the ‌IMF said the public ‌budget deficit fell to 5.1% of GDP in 2025, but efforts to further rein it in were proceeding more slowly ​than planned and faced "significant implementation risks".

With current policies unlikely to meet the government's goal of reducing the deficit below 3% ⁠by 2029, the IMF said in a statement that a presidential election next year ​offered an opportunity for a more credible reset.

Without additional measures, debt would stay elevated and increase the ​risk of more painful cuts later. ‌The fund added that rising spending pressures from an ageing population, defence and energy transition further ⁠strained already high public spending, which reached 57.5% of GDP last year.

Growth remains modest, with the economy expected to expand by 0.7% in ⁠2026 after growing 0.9% in 2025, weighed by geopolitical tensions and domestic ​political uncertainty ahead of the 2027 election.

To contain risks, the IMF called for a credible multi‑year strategy combining spending restraint and structural reforms, including ‌to the pension system, tighter unemployment benefits and more efficient health and education spending.

Pension reform is ‌likely to be a major battleground in the 2027 election after ⁠the government suspended a 2023 ‌increase in the ​retirement age last year as a concession to get the budget adopted.

(Reporting by Leigh Thomas; Editing by ‌Alex Richardson)

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