IMF Chief Tells France: 'Get Your House in Order' — SkimNews
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- Kristalina Georgieva told France to "get your house in order" in a CNBC interview from Singapore, citing a "staircase that does not lead to heaven" of repeated borrowing shocks layered on top of political instability
- French 10-year bond yields (OATs) have surged more than 100 basis points since the start of the year, now exceeding yields investors demand on Italian government bonds
- France's deficit hit 5.1% of GDP last year and the country is under the EU's excessive deficit procedure, with officials acknowledging the need to bring it under 5%
- Student protests now in their third week — over long study days, teacher shortages, and rundown schools — are complicating the government's push for tens of billions of euros in spending cuts through a politically fractured parliament
- Georgieva said Europe is "much more mature" than during the early-2000s euro zone sovereign debt crisis, pointing to the ECB and other financial stability instruments as buffers
- Bond markets "respond to fundamentals" — with inflation up, interest rates up, and government debt high — and Georgieva warned of "further climbs up" if governments don't signal borrowing will be contained
Why it matters: France's borrowing costs now exceed Italy's — a country with a far weaker fiscal reputation — and the 100+ basis point yield surge signals investor doubt that Paris can deliver tens of billions in planned spending cuts. With protests dragging on and a fractured parliament, the political channel for fiscal tightening is narrowing, raising the risk that bond markets force the adjustment rather than elected officials.
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