{
  "title": "Public Information Notice: IMF Executive Board Concludes 2011 Article IV Consultation with France",
  "publication": "IMF News, July 27, 2011",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1199",
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  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2011-07-27",
  "sections": [
    {
      "heading": "Background — macroeconomic developments and risks",
      "content": "- Growth in 2011 expected to be around 2 percent.\n- Unemployment rate remains high at 9½ percent, but employment has been increasing.\n- Growth in early 2011 led by robust private consumption and stock-building, and supported by a recovery in investment; net exports have remained lackluster.\n- External risks: possible spillovers from lingering euro area sovereign debt problems, and uncertainty about energy prices.\n- Fiscal outlook and consolidation:\n  - Fiscal deficit in 2010 was 7.1 percent (better than foreseen).\n  - Overall budget deficit targeted to be reduced to 3 percent of GDP by 2013 and 2 percent of GDP by 2014.\n  - Planned adjustment to be implemented through binding multi-year restrictions on more than three-quarters of central government expenditures and minimum yearly targets for the reduction in tax expenditures.\n  - Ability to achieve targeted adjustment hinges on pace of economic recovery; more efforts might be needed to achieve the 2012–13 targets if actual growth falls short of authorities’ projections.\n- Financial sector:\n  - French banking sector has overcome most crisis legacies and returned to strong profitability.\n  - Bank capital remains below some European peers, but is increasing; major French banks should be able to meet the Basel III capital requirements by 2013/14.\n  - Major banks remain highly reliant on wholesale funding and exposed to peripheral Euro countries.\n  - Institutional reforms: unification of banking and insurance supervision; inclusion of consumer protection mandates; creation of a national systemic risk board.\n  - House prices increased rapidly over the past year, but financial stability risks from rapid house price increases seem at this stage contained.\n- Labor market and structural challenges:\n  - France challenged to lift potential growth and reduce unemployment, particularly lack of jobs for young, unskilled, and senior workers.\n  - Reduction in unemployment in part due to labor market reforms.\n  - Government programs provide incentives for education and innovation.\n  - Ongoing efforts to improve competition in product and services markets where progress remains limited."
    },
    {
      "heading": "Executive Board Assessment — priorities and recommendations",
      "content": "- Overall assessment:\n  - Supportive policy measures and key reforms in the pension system and labor market have underpinned a gradual, more broad-based recovery.\n  - Consumption robust, investment picked up, and employment is rising.\n  - Economic outlook favorable but risks tilted to the downside amid the sovereign debt crisis in the euro area and uncertainty about energy and commodity prices.\n- Main policy priorities identified:\n  - Restore fiscal sustainability.\n  - Safeguard financial sector stability.\n  - Reduce unemployment.\n  - Build on momentum of structural reforms to promote competitiveness and inclusive growth.\n- Fiscal policy recommendations:\n  - Credible fiscal consolidation necessary for debt sustainability.\n  - Consolidation targets in France’s Stability Program and the 2011–14 multi-year budget framework strike the right balance; they are front-loaded and expenditures-based.\n  - Prepare specific contingency measures in case growth outcomes fall short of expectations.\n  - Use windfall revenue to accelerate deficit and debt reduction.\n  - Enact a fiscal rule to signal commitment to fiscal sustainability.\n  - Use conservative growth forecasts and cap autonomous spending of local governments and social security to enhance credibility of adjustment strategy.\n  - Encourage deeper reforms of the pension and health care systems, building on recent progress.\n- Financial sector recommendations:\n  - Welcome resilience of French financial system as confirmed by stress tests undertaken by the European Banking Authority.\n  - Commend authorities for strengthening supervisory arrangements (unification of banking and insurance supervision, consumer protection mandate, national systemic risk board).\n  - Call for continued vigilance on house prices and readiness to take measures as necessary, including macro-prudential tools.\n  - Banks should benefit from swiftly raising capital levels, aiming to meet Basel III requirements by 2013/14, ahead of the official implementation period.\n  - Need for tailored and internationally consistent measures for globally systemic banks, including capital surcharges.\n  - Welcome France’s active involvement in international debate on financial regulatory reform.\n- Structural reform recommendations:\n  - Press ahead with reforms to boost competitiveness, job creation, and productivity growth.\n  - Strategy should be multi-pronged and carefully articulated in light of fiscal consolidation.\n  - Key elements: keep real wage increases in line with productivity improvements; increase labor force participation; foster competition in the service sector.\n  - Reduce high structural unemployment via targeted job search support, training opportunities, and modernization of the tax and benefit systems."
    },
    {
      "heading": "Selected economic and social indicators (key figures and projections)",
      "content": "- Real economy (change in percent)\n  - Real GDP: -0.2 (2008), -2.6 (2009), 1.4 (2010), 2.1 (2011), 1.9 (2012), 2.0 (2013)\n  - Domestic demand: 0.1 (2008), -2.4 (2009), 1.3 (2010), 2.2 (2011), 1.7 (2012)\n  - CPI (year average): 3.2 (2008), 1.8 (2009), (other years not listed)\n  - Unemployment rate (in percent): 7.8 (2008), 9.5 (2009), 9.7 (2010), 9.3 (2011), 8.8 (2012), 8.6 (2013), 8.2 (2014), 7.9 (2015)\n- Savings and investment (percent of GDP)\n  - Gross national savings: 20.1 (2008), 17.5 (2009), 18.6 (2010), 19.2 (2011), 19.5 (2012), 19.7 (2013), 20.0 (2014), 20.2 (2015)\n  - Gross domestic investment: 21.9 (2008), 19.0 (2009), 20.4 (2010), 20.8 (2011), 21.2 (2012), 21.4 (2013), 21.5 (2014), 21.8 (2015), 22.0 (2016)\n- Public finance (percent of GDP)\n  - Central government balance: -3.3 (2008), -6.2 (2009), -6.3 (2010), -4.4 (2011), -3.8 (2012), -3.0 (2013), -2.5 (2014), -1.8 (2015), -1.2 (2016)\n  - General government balance: -7.5 (2008), -7.1 (2009), -5.7 (2010), -4.8 (2011), -2.9 (2012), -2.0 (2013), -1.1 (2014)\n  - Structural balance (percent of potential GDP): -4.6 (2008), -3.9 (2009), -2.2 (2010), -1.6 (2011), -1.0 (2012)\n  - Primary balance: -0.6 (2008), -5.3 (2009), -4.9 (2010), -3.1 (2011), -0.9 (2012), 1.2 (2013)\n  - General government gross debt 1/: 68.2 (2008), 79.0 (2009), 82.3 (2010), 85.2 (2011), 87.2 (2012), 88.1 (2013), 87.8 (2014), 86.5 (2015), 84.4 (2016)\n- Money and interest rates (in percent)\n  - Money market rate: 3.8 (2008), 1.0 (2009), 0.8 (2010)\n  - Government bond yield: 4.2 (2008), 3.6 (2009), 3.1 (2010)\n- External sector (in percent of GDP and volume growth)\n  - Exports of goods: 21.3 (2008), 18.1 (2009), 22.6 (2010), 23.0 (2011), 22.9 (2012)\n  - Volume growth (exports): -12.2 (2008), 9.4 (2009), 6.4 (2010), 4.6 (2011), 3.9 (2012)\n  - Imports of goods: 24.3 (2008), 25.8 (2009), 26.0 (2010), 25.9 (2011)\n  - Volume growth (imports): 0.6, -10.6, 8.3, 6.5, 3.7 (years/labels as in source table)\n  - Trade balance: -2.3 (2008), -2.8 (2009)\n  - Current account: -1.7 (2008), -1.5 (2009), -2.1 (2010), -1.9 (2011)\n  - FDI (net): -3.2 (2008), -1.4 (2009)\n- Reserves and Fund position\n  - Official reserves (US$ billion): 33.6 (2008), 46.6 (2009)\n  - Holdings of currency (percent of quota): 86.3, 80.8, 79.7, 73.1 (as of April 30, 2011)\n  - Holdings of SDRs (percent of allocation): 58.1, 95.9, 96.1\n  - Quota (SDRs million): 10739\n- Exchange rates and competitiveness indices\n  - Euro per U.S. dollar, period average 1/: 0.68 (2008), 0.72 (2009), 0.75 (2010), 0.70 (2011)\n  - Nominal effective rate, ULC-styled (2000=100) 1/: 113.8 (2008), 113.7 (2009), 110.4 (2010), 111.2 (2011)\n  - Real effective exchange rate, ULC-based (2000=100): 113.9 (2008), 115.2 (2009), 109.8 (2010), 111.5 (2011)\n- Potential output and output gap\n  - Potential output: 1.1 (2008), 1.5 (2009), 1.6 (2010)\n  - Output gap: -0.7 (2008), -4.2 (2009), -3.6 (2010), -2.7 (2011), -0.4 (2012), 0.0 (2013)\n- Social indicators\n  - Per capita GDP (2006): US$35,471\n  - Life expectancy at birth (2006): 77.2 (male) and 84.1 (female)\n  - Poverty rate (2005): 12.1 percent (60 percent line), 6.3 percent (50 percent line)\n  - Income distribution (ratio of income received by top and bottom quintiles, 2004): 4.2\n\nPublic Information Notice (PIN) No. 11/99; July 27, 2011.\n\n---\n\n Content in this bundle\n\n- Cr11211pdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Cr11212pdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- Country Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- France and the IMF\n- Public Information Notices\n- https://www.imf.org/external/mmedia/view.aspx?vid=1080610198001\n- Adobe Acrobat Reader\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1199"
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    "Published: July 27, 2011",
    "Growth in 2011 expected to be around 2 percent.",
    "Unemployment rate remains high at 9½ percent, but employment has been increasing.",
    "Growth in early 2011 led by robust private consumption and stock-building, and supported by a recovery in investment; net exports have remained lackluster.",
    "External risks: possible spillovers from lingering euro area sovereign debt problems, and uncertainty about energy prices.",
    "Fiscal outlook and consolidation:",
    "Financial sector:",
    "Labor market and structural challenges:",
    "Overall assessment:",
    "Main policy priorities identified:",
    "Fiscal policy recommendations:",
    "Financial sector recommendations:",
    "Structural reform recommendations:",
    "Real economy (change in percent)",
    "Savings and investment (percent of GDP)",
    "Public finance (percent of GDP)",
    "Money and interest rates (in percent)",
    "External sector (in percent of GDP and volume growth)",
    "Reserves and Fund position",
    "Exchange rates and competitiveness indices",
    "Potential output and output gap",
    "Social indicators",
    "[Cr11211pdf (PDF)](/-/media/websites/imf/imported/external/pubs/ft/scr/2011/_cr11211pdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Cr11212pdf (PDF)](/-/media/websites/imf/imported/external/pubs/ft/scr/2011/_cr11212pdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Country Report (PDF)](/external/pubs/ft/scr/2011/cr11211.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[France and the IMF](http://www.imf.org/external/country/FRA/index.htm)",
    "[Public Information Notices](https://www.imf.org/en/news/searchnews)",
    "[https://www.imf.org/external/mmedia/view.aspx?vid=1080610198001](https://www.imf.org/external/mmedia/view.aspx?vid=1080610198001)",
    "[Adobe Acrobat Reader](https://www.imf.org/adobe)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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