IMF Chief Warns France to Stabilize National Finances

International Monetary Fund Managing Director Kristalina Georgieva warned the French government to bring its national finances under control following a surge in government bond yields. Speaking in Singapore, Georgieva urged France to "get your house in order" as 10-year bond yields have risen by more than 100 basis points since the start of the year, now exceeding those of Italian bonds.

The financial pressure coincides with a political crisis and three weeks of violent student protests over education shortages and long study days. These protests complicate government efforts to pass tens of billions of euros in spending cuts to reduce a deficit that reached 5.1% of GDP last year. While the European Union has recommended a deficit closer to 3%, Georgieva noted a recognition in France that the deficit must at least fall below 5%.

Despite the instability, Georgieva stated that the European Central Bank and other mature EU systems provide better protection against a sovereign debt crisis than existed in the early 2000s.