France's debt: "It will take time to regain confidence", laments the head of the IMF

The warning is particularly severe for French finances. The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, estimated on Wednesday that it “will take time” for France to reduce its debt and deficit to levels likely to “inspire confidence” in investors.

While the examination of the 2027 budget begins Tuesday in the National Assembly with the desire to achieve a deficit of 5% of GDP, its adoption remains very uncertain in the absence of a majority. On the bond market, the 10-year French borrowing rate is now approaching the 5% threshold.

An urgent call for budgetary discipline

More broadly, the head of the IMF called on the governments of developed economies to “urgently” restore their budgetary discipline in the face of escalating rates on the debt market.

“Too many countries have not taken advantage of the post-pandemic recovery to rebuild their budgetary margins,” lamented Kristalina Georgieva during the organization’s annual meeting in Bangkok, describing advanced countries as “worst performers”.

Direct repercussions on vulnerable countries

This deterioration of public accounts comes at a time when government bond yields are reaching new heights in more than two decades in the United States and Europe.

Kristalina Georgieva warns of the devastating effects of this situation for developing economies: the rise in reference rates deprives emerging markets of safety margins and considerably increases their own debt burden.