عربي English Türkçe اردو فارسى
Logo
Latest News
Business

Bank of France Chief: France Could Reduce Deficit to EU Limit in 5 Years

A man rides an electric Lime bicycle on a bike path past the Hotel des Invalides in Paris, France, September 23, 2024. REUTERS/Abdul Saboor
A man rides an electric Lime bicycle on a bike path past the Hotel des Invalides in Paris, France, September 23, 2024. REUTERS/Abdul Saboor
TT
TT

Bank of France Chief: France Could Reduce Deficit to EU Limit in 5 Years

A man rides an electric Lime bicycle on a bike path past the Hotel des Invalides in Paris, France, September 23, 2024. REUTERS/Abdul Saboor
A man rides an electric Lime bicycle on a bike path past the Hotel des Invalides in Paris, France, September 23, 2024. REUTERS/Abdul Saboor

It is not realistic for France to lower its deficit to 3% of GDP within three years but it could be possible within five years with the right course of action, Bank of France head Francois Villeroy de Galhau on Wednesday.
"Three years is not realistic, not economically or with regards to growth. But to do it in five years is possible," Villeroy, who is also a policymaker at the European Central Bank, told France 2 TV.
Earlier this week, French finance minister Antoine Armand said the country's budget deficit was one of its worst in history. The government currently expects a 2024 budget deficit of 5.1% of GDP - above the European Union's limit of 3%.
Prime Minister Michel Barnier has suggested he would be open to raising taxes on the wealthy and some corporations as the country struggles to contain the deficit. Spending cuts are also expected, which Villeroy said in the interview that he supported, according to Reuters.
One of the first hurdles for France's new government will be steering a budget for 2025 through an unruly hung parliament.
In rare good news for the new government, consumer confidence improved for the third straight month in September, topping analysts' expectations, official INSEE data showed.
An increase in the proportion of households feeling that the present is a good time to make big purchases, as well as growing optimism over the ability to save money, helped drive the index up two points to 95, still below the long-term average.
Fears about unemployment also fell.
In a sign of investor concerns about the new government's ability to tackle the high budget deficit, France's borrowing costs briefly rose above Spain's on Tuesday for the first time since 2008.

Most Viewed

 
 
Business

IMF: Pakistan Wins More Financing Assurances from Saudi Arabia, UAE, China

Pakistan’s Prime Minister Shehbaz Sharif (Asharq Al-Awsat)
Pakistan’s Prime Minister Shehbaz Sharif (Asharq Al-Awsat)
TT
TT

IMF: Pakistan Wins More Financing Assurances from Saudi Arabia, UAE, China

Pakistan’s Prime Minister Shehbaz Sharif (Asharq Al-Awsat)
Pakistan’s Prime Minister Shehbaz Sharif (Asharq Al-Awsat)

Pakistan has received “significant financing assurances” from China, Saudi Arabia and the United Arab Emirates linked to a new International Monetary Fund (IMF) program that go beyond a deal to roll over $12 billion in bilateral loans owed to them by Islamabad, IMF Pakistan Mission Chief Nathan Porter said on Thursday.

Porter declined to provide details of additional financing amounts committed by the three countries but said they would come on top of the debt rollover.

The IMF's Executive Board on Wednesday approved a new $7 billion loan for cash-strapped Pakistan, more than two months after the two sides said they had reached an agreement.

The loan — which Islamabad will receive in installments over 37 months — is aimed at boosting Pakistan's ailing economy.

“I won't go into the specifics, but UAE, China and the Kingdom of Saudi Arabia all provided significant financing assurances joined up in this program,” Porter told reporters on a conference call.

The global lender said its immediate disbursement will be about $1 billion.

In a statement issued Thursday, the IMF praised Pakistan for taking key steps to restore economic stability. Growth has rebounded, inflation has fallen to single digits, and a calm foreign exchange market have allowed the rebuilding of reserve buffers.

But it also criticized authorities. The IMF warned that, despite the progress, Pakistan’s vulnerabilities and structural challenges remained formidable.

It said a difficult business environment, weak governance, and an outsized role of the state hindered investment, while the tax base remained too narrow.

“Spending on health and education has been insufficient to tackle persistent poverty, and inadequate infrastructure investment has limited economic potential and left Pakistan vulnerable to the impact of climate change,” it warned.

Prime Minister Shehbaz Sharif in a statement hailed the deal that his team had been negotiating with the IMF since June.

Sharif, on the sidelines of the United Nations General Assembly, told Pakistani media that the country had fulfilled all of the lender’s conditions, with help from China and Saudi Arabia.

“Without their support, this would not have been possible,” he said, without elaborating on what assistance Beijing and Riyadh had provided to get the deal over the line.

The Pakistani government has vowed to increase its tax intake, in line with IMF requirements, despite protests in recent months by retailers and some opposition parties over the new tax scheme and high electricity rates.

Pakistan for decades has been relying on IMF loans to meet its economic needs.

The latest economic crisis has been the most prolonged and has seen Pakistan facing its highest-ever inflation, pushing the country to the brink of a sovereign default last summer before an IMF bailout.

Inflation has since tempered, and credit ratings agency Moody’s has upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to “Caa2” from “Caa3”, citing improving macroeconomic conditions and moderately better government liquidity and external positions.