September 21, 2017 / 2:33 PM / a year ago

IMF tells France to spell out spending cuts

PARIS (Reuters) - France must lose no time spelling out detailed plans to rein in spending, which will make or break President Emmanuel Macron’s plans for overhauling the economy, the International Monetary Fund said on Thursday.

The International Monetary Fund logo is seen during the IMF/World Bank spring meetings in Washington, U.S., April 21, 2017. REUTERS/Yuri Gripas

The IMF will scrutinise the government’s 2018 budget due next Wednesday, the first of Macron’s presidency, for details on how it will cut spending and taxes at the same time, IMF France mission chief Christian Mumssen said.

“For the overall strategy to work you really need comprehensive spending reforms at all levels of government and you need to move on this very early,” Mumssen said on a conference call presenting an annual in-depth report on France.

The government has said it aims to cut spending by 16 billion euros (£14.12 billion) next year as a first instalment in 60 billion euros in savings over the duration of Macron’s five-year term.

However, the government also wants to move quickly on easing France’s considerable tax burden starting with tax cuts worth 10 billion euros also next year.

Helping to ease the difficult budget balancing act, the government can count on the strongest growth since 2011 with the IMF forecasting the economy would grow 1.6 percent this year and 1.8 percent next year.

The government has said that its budget will be based on a growth forecast both this year and next of 1.7 percent.

The IMF was less optimistic about the outlook for the public sector deficit, estimating that it would stand at 3.0 percent of economic output both this year and next.

For its part, the government said this week it expected a deficit this year of 2.9 percent this year and 2.6 percent in 2018.

Reporting by Leigh Thomas; editing by Richard Lough

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