Hard-left presidential candidate's plan to cancel French debt sparks backlash
The plan would cut France’s public debt ratio above 116% of GDP, but officials warn it could spook investors and raise borrowing costs.
- Far-Left presidential candidate Jean-Luc Melenchon, leader of La France Insoumise , revived calls to cancel 18% of French debt held by the Bank of France, aiming to reduce the public debt ratio now at over 116% of GDP.
- Left-Leaning investment banker Matthieu Pigasse backed the proposal at the LFI party conference last weekend, arguing that cancelling bonds at the Bank of France could occur "without any economic or financial impact."
- Prime Minister Sebastien Lecornu described the proposal as "fraud in its purest form," warning that even considering such a move could spook investors and drive up interest rates.
- With France needing to raise 310 billion euros this year, former IMF chief economist Olivier Blanchard denounced the debate as "irresponsible," noting that reneging on debt signatures would damage market confidence.
- A poll on Monday showed Melenchon poised for a run-off with far-right leader Marine Le Pen in next year's presidential election, as France's political class struggles to contain mounting debt.
6 Articles
6 Articles
The Straits Times
BizTocHard-left presidential candidate's plan to cancel French debt sparks backlash
PARIS, Aug 26 - France's political class has been roiled in recent years by its attempts to rein in the country's increasingly heavy debt load. Far-left presidential candidate Jean-Luc Melenchon has a simple but highly divisive idea: cancel it. Read more at straitstimes.com.
MP LFI Mathilde Panot claims that the ECB can put the public debt of the French state in the fridge. She refers to "a massive purchase of public debt securities during the Covid".
On Friday, the Fitch agency will look at the sovereign note of France, and it "would have arguments" to further degrade it. Meanwhile, the hypothesis of a president Melenchon cancelling 18% of our debt circulates in European economic circles. Welcome to the horror novel of French public finances. 18% The share of the French debt that a fiction scenario attributes to Jean-Luc Mélenchon president to be purely and simply cancelled – what to cause a…
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