The French minority government is anticipated to fall in a confidence vote on September 8, as opposition parties dismiss Prime Minister François Bayrou’s plea for support of his 2026 budget proposals.
Bayrou’s finance minister, Eric Lombard, cautioned that a collapse might lead to chaos necessitating IMF intervention, though he later retracted the statement. Lagarde, who led the IMF during past eurozone bailouts, suggested such concerns were overstated.
She noted that the IMF usually assists countries facing immediate balance of payments issues and debt crises, which wasn’t France’s situation. Lagarde stated the IMF would likely advise France to organize its public finances instead.
She emphasized the necessity for France’s debt service and volumes to decrease in line with European agreements.
EU rules cap a country’s budget deficit at 3 percent of GDP, but France has exceeded this limit since the pandemic, remaining above 5 percent of GDP this year. Bayrou seeks parliamentary approval for a budget reducing the deficit to 4.6 percent next year.
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