France is Grappling With Protests and Soaring Bond Yields. The IMF Chief Told Paris to Get Its ‘House In Order.’

International Monetary Fund (IMF) head Kristalina Georgieva called on France to reduce deficit spending as the country grapples with soaring bond yields and a political crisis.

Speaking to CNBC, Georgieva called on the country to bring its deficit below 5%, something that has not happened since 2022. This year's figure is expected to clock in at 5.1% of its GDP, same as 2025, while 2027's is set to increase to 5.7%.

France is also under the European Union's excessive deficit procedure. The country has committed to a fiscal adjustment path through 2029 aimed at bringing its deficit below the EU's 3% of GDP threshold, according to the European Commission.

Asked if the situation could resemble that of the euro zone sovereign debt crisis that took place earlier this century, she said no, noting that the "French economy is growing" and that Europe has a "much more mature system."

"We have the strength of the European Central Bank. We have other instruments that Europe has developed to protect against financial stability risks," she added. Georgieva then did appeal directly to the country's authorities: "Get your house in order."

"What we see in France is a complication of, on one side, the consequence of borrowing shock after shock after shock, climbing on this staircase that does not lead to heaven, and on the other side, a political dynamic scene in France that creates more difficulties for the finance ministry to put a clear path for tightening," Georgieva said.

She was making reference to student protests that have now stretched into the third week and grown violent. They began late last month in the Paris region before spreading across the country, with students raising concerns about teacher shortages, class sizes, long school days and the condition of school buildings. Hundreds of schools have been affected by blockades and closures as demonstrations continued into October.

The Interior Ministry has said the violence has moved beyond what it considers the legitimate expression of students' grievances.

The unrest is unfolding as Prime Minister Sébastien Lecornu's government begins negotiations over its 2027 budget, which calls for a fiscal adjustment worth €54 billion.

The plan includes €43 billion in new measures and €11 billion from previously adopted measures that will have a larger impact next year, according to the French government. Paris is targeting a public deficit of 5% of gross domestic product in 2027, or 4.8% excluding additional defense spending.

The government said much of the adjustment would come from tighter control of spending. Primary public expenditure, which excludes debt-servicing costs, is expected to remain flat in volume terms, while spending excluding both debt costs and defense would decline.

The budget pressure leaves the government with limited room to address demands for significantly higher public spending.