June 4, 2018 / 1:13 PM / 2 years ago

France blazing a reform trail, but spending cuts needed: IMF

French President Emmanuel Macron speaks at a conference to present a plan for the preservation of heritages sites at the Elysee Palace, in Paris, France, May 31, 2018. Christophe Petit Tesson/Pool via Reuters

PARIS (Reuters) - France under President Emmanuel Macron has become one of the fastest-reforming countries in Europe but needs to be more detailed on how it will cut public spending, the International Monetary Fund said on Monday in its annual assessment.

“With this ambitious pace of reforms, France has now become a reform leader in Europe,” the IMF said in a statement, adding that last year’s easing of the labor code should boost investment, jobs and growth.

More specifics were required on how Macron’s pro-business government intended to put its public debt levels on a sustainable downward trajectory, it added.

Macron is expecting recommendations from a committee of experts in the coming days on how to reduce public spending.

France’s cherished social model provides free education and health care and has helped keep inequalities relatively low, but it has pushed public spending and the taxes to pay for it to amongst the highest levels in the developed world.

“Specifying spending reforms at all levels of government, starting with the 2019 budget, is key for the credibility of the strategy,” the IMF said.

It said France should consider raising the effective retirement age — the age at which workers on average begin drawing their pension — as part of a pension reform under discussion.

It should also cut the number of public workers by not replacing departing employees and merging local authorities, while welfare benefits should be better targeted and simplified, the IMF added.

The Washington-based institution said it expected economic growth to remain robust in France this year, but less buoyant than in 2017.

Reporting by Michel Rose and Myriam Rivet; Editing by Richard Lough

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