{
  "title": "France: Selected Issues",
  "publication": "IMF Staff Country Reports, July 12, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2024/07/12/france-selected-issues-551777",
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  "summary": "This Selected Issues paper aims to deep dive on the climate transition for France. The paper discusses macroeconomic implications, fiscal policies, and financial risks. France has taken a leadership role in global mitigation initiatives.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The Selected Issues paper provides a deep dive on the climate transition for France, discussing macroeconomic implications, fiscal policies, and financial risks.\n- France has taken a leadership role in global mitigation initiatives.\n- The transition toward a low-carbon economy and the structural changes associated with it can pose important economic and financial challenges if not well-managed and timed.\n- A growing number of central banks and global institutions increasingly acknowledge the financial stability implications of climate transition risk."
    },
    {
      "heading": "Macroeconomic implications",
      "content": "- The paper analyzes how the climate transition affects the broader economy through structural change, sectoral shifts, and timing of adjustments.\n- It emphasizes that poor management or mistiming of the transition can amplify economic and financial challenges."
    },
    {
      "heading": "Fiscal policy options and revenue recycling",
      "content": "- Revenue could be recycled through targeted cash transfers to vulnerable households and reductions in labor and/or corporate income taxes.\n- Sectoral policies can usefully complement carbon pricing while helping balance fiscal, economic, equity, and acceptability objectives.\n- Transitioning to distance-based charges can help:\n  - close emissions gaps,\n  - reach the sectoral carbon budget,\n  - and maintain revenue."
    },
    {
      "heading": "Financial sector and stability risks",
      "content": "- French banks should continue to mitigate climate transition risks by integrating them into their governance, strategy, and risk management processes.\n- The paper highlights the importance of financial institutions and regulators recognizing and addressing transition-related financial stability implications."
    },
    {
      "heading": "Policy recommendations and instruments",
      "content": "- Combine carbon pricing with targeted sectoral policies to balance fiscal, economic, equity, and political acceptability objectives.\n- Recycle carbon or transition-related revenues to protect vulnerable households and reduce distortionary labor and corporate taxes.\n- Implement distance-based charges in transportation to better align with emissions targets and preserve revenue streams.\n- Strengthen bank governance, strategy, and risk management to manage climate transition risks and their financial stability implications.\n\nInternational Monetary Fund. \"France: Selected Issues\", July 12, 2024.\n\n---\n\n Content in this bundle\n\n- France: Selected Issues; IMF Country Report No. 24/217; June 18, 2024\n  - France: Selected Issues; IMF Country Report No. 24/217; June 18, 2024 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - France: Selected Issues; IMF Country Report No. 24/217; June 18, 2024 (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
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    "Published: July 12, 2024",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400281488.002",
    "The Selected Issues paper provides a deep dive on the climate transition for France, discussing macroeconomic implications, fiscal policies, and financial risks.",
    "France has taken a leadership role in global mitigation initiatives.",
    "The transition toward a low-carbon economy and the structural changes associated with it can pose important economic and financial challenges if not well-managed and timed.",
    "A growing number of central banks and global institutions increasingly acknowledge the financial stability implications of climate transition risk.",
    "The paper analyzes how the climate transition affects the broader economy through structural change, sectoral shifts, and timing of adjustments.",
    "It emphasizes that poor management or mistiming of the transition can amplify economic and financial challenges.",
    "Revenue could be recycled through targeted cash transfers to vulnerable households and reductions in labor and/or corporate income taxes.",
    "Sectoral policies can usefully complement carbon pricing while helping balance fiscal, economic, equity, and acceptability objectives.",
    "Transitioning to distance-based charges can help:",
    "French banks should continue to mitigate climate transition risks by integrating them into their governance, strategy, and risk management processes.",
    "The paper highlights the importance of financial institutions and regulators recognizing and addressing transition-related financial stability implications.",
    "Combine carbon pricing with targeted sectoral policies to balance fiscal, economic, equity, and political acceptability objectives.",
    "Recycle carbon or transition-related revenues to protect vulnerable households and reduce distortionary labor and corporate taxes.",
    "Implement distance-based charges in transportation to better align with emissions targets and preserve revenue streams.",
    "Strengthen bank governance, strategy, and risk management to manage climate transition risks and their financial stability implications.",
    "**France: Selected Issues; IMF Country Report No. 24/217; June 18, 2024**"
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