IMF tells France to take more action to cut debt

France will probably need extra action to cut its public deficit to meet targets for 2012 and 2013, the International Monetary Fund (IMF) said on Wednesday in its annual report on the country.

Reuters/Shannon Stapleton

French growth will slow in 2012 to 1.9 per cent from 2.1 per cent this year, the report predicts. The French government's 2012 forecast is 2.25 per cent growth.

France is the eurozone's second-biggest economy after Germany.

"Progress is being made in fiscal consolidation but more efforts might be needed to reach the 2012-13 targets," it said in a report due for publication later Wednesday but released early by French Economy Minister François Baroin.

Last month the IMF released figures showing France was set for a 2011 public deficit of 5.8 per cent of output, nearly double the EU required limit and above the eurozone average, falling to 4.9 per cent in 2012.

In that report the global lender forecast France would have public debt of 84.8 per cent in 2011 rising to 86.6 next year.

President Nicolas Sarkozy last week played a leading role in drawing up a new debt
bailout for Greece to stabilise the eurozone.

He is trying to amend France's constitution to oblige governments to keep a rigorously balanced public budget, but faces a battle with the Socialist opposition over the plan.

Former French Finance Minister Christine Lagarde has just taken over as head of the IMF after the resignation of Dominique Strauss-Kahn because of his arrest on sexual assault charges.