IMF urges Italy, France to spend less, Germany to loosen purse strings

Italy and France should cut spending faster than they currently plan to keep debt under control while Germany should loosen its own purse strings to revive growth, the International Monetary Fund said on Friday.

Finance ministers from all over the world have descended on Washington this week to compare notes and hear from IMF and World Bank experts on topics ranging from fiscal policy to global growth and helping poorer countries.

While the IMF's advice is not binding for countries that do not receive its help, its latest musings on Italy, France and Germany are likely to bring back uncomfortable memories of the last decade's debt crisis.

"Advanced European economies with relatively high debt levels should implement more significant and front-loaded fiscal consolidation than envisaged under the authorities' current policies (for example, Belgium, France, and Italy)," the IMF said in its economic outlook for Europe.

The global lender's European director, Alfred Kammer, told Reuters in an interview that Italy's government should stop an "inefficient" incentive for home renovations, known locally as the Superbonus, currently due to be gradually phased out by the end of next year.

France, in turn, could reap a "substantial yield" by getting rid of energy subsidies launched after Russia's invasion of Ukraine in 2022, Kammer added.

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