France’s public debt crisis: Time to restructure?

To the best of the authors’ knowledge, this study is the first to propose a sovereign debt restructuring for contemporary France. It shows how France could gain meaningful fiscal space through a sovereign debt reprofiling, arguing it is a warranted solution to France’s current fiscal, economic, and social challenges. Such a debt workout would lower the present value of France’s public debt from 113.5% to 64.3% of GDP while halving the country’s problematic net external debt. It would place France on a trajectory toward compliance with the Maastricht’s deficit and debt criteria. The paper further shows how a debt workout could be initiated and managed by France without reliance on external funding. Finally, it contends that a sovereign debt restructuring is an essential tool for any future progressive government seeking to operate within the Maastricht’s framework, thereby pursuing its fiscal priorities without provoking a direct breach of current fiscal rules.