Journal Issue

Staff Report for the 2010 Article IV Consultation—Informational Annexes

International Monetary Fund
Published Date:
July 2010
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I. France: Fund Relations

(As of May 31, 2010)

I. Membership Status: Joined December 27, 1945; Article VIII

II.General Resources Account:

SDR MillionPercent of Quota
Fund holdings of currency8,185.3476.22
Reserve position in Fund2,553.3423.78

III. SDR Department:

SDR MillionPercent of Allocation
Net cumulative allocation10,134.20100.00

IV. Outstanding Purchases and Loans: None

V. Latest Financial Arrangements: None

VI. Projected Payments to Fund (SDR million;based on existing use of resourcesand present holdings of SDRs):


VII. Implementation of HIPC Initiative: Not applicable

VIII. Safeguards Assessments: Not applicable

IX. Exchange Rate Arrangements:

  • France’s currency is the euro, which floats freely and independently against other currencies.

  • In accordance with EU regulations and the relevant UN Security Council resolutions, certain restrictions are maintained on the making of payments and transfers for current international transactions with respect to the former government of Iraq, the former government of Liberia, Myanmar, certain individuals associated with the previous government of the former Republic of Yugoslavia, and Zimbabwe. Financing of, and financial assistance related to, military activities in the Democratic Republic of the Congo (from October 1, 2003), Somalia (effective January 27, 2003), and Sudan (from January 26, 2004) are prohibited. Restrictions also apply on transfers with respect to the Taliban and individuals and organizations associated with terrorism. The restriction with respect to the Socialist People’s Libyan Arab Jamahiriya has been notified to the Fund under Decision No. 144-(52/51).

  • Measures have been taken to freeze accounts of listed persons and entities linked to terrorists pursuant to the relevant EU regulations and UN Security Council resolutions.

X. Article IV Consultation:

The last Article IV consultation was concluded on July 31, 2009. The associated Executive Board assessment is available at and the staff report at France is on the standard 12-month consultation cycle.

XI. FSAP Participation and ROSC:

France-Report on the Observance of Standards and CodesOctober 17, 2000
(ROSC): Module I—Fiscal Transparency
Fiscal Transparency—UpdateIMF Country Report
No. 01/196, 11/05/01
Fiscal Transparency—UpdateIMF Country Report
No. 04/345, 11/03/04

Summary: The report found that France has achieved a high level of fiscal transparency and has introduced a number of improvements in coverage and presentation of fiscal information. Notable areas of progress include the development in the final accounts publication to include more complete information on government assets and liabilities as well as disclosure of contingent liabilities. Accounting standards have been changed to reflect accruals principles in a number of areas, and these standards are clearly explained. The staff suggested that further steps could be taken to identify and report quasi-fiscal activities in the budget presentation, provide a more consolidated picture of fiscal activity outside the appropriation process, and improve the reconciliation of stated policies with outcomes at the general government level.

These issues have been addressed in the Loi organique aux lois de finance (LOLF), which has become fully effective on January 1, 2006. In addition to the annual appropriations, the first multi-annual fiscal framework law was adopted in January 2009, and contains fiscal objectives for the period 2009–12. The budget is organized along missions and provides details on the level of appropriations for each mission and performance indicators by which the expected results of the mission will be assessed ex post. The State Audit Office has been given the new assignment of certifying the public accounts, and implementation of accrualsbasis accounting has been confirmed. Parliamentary oversight powers have been strengthened.

France—Report on the Observance of Standards and CodesOctober 2000, correct
(ROSC): Module II—Transparency in Monetary and Financial2/15/01
Transparency in Monetary and Financial Policies—UpdateIMF Country Report
No. 01/197, 11/05/01
Transparency in Monetary and Financial Policies—UpdateIMF Country Report
No. 02/248, 11/13/02

Summary: The 2000 ROSC noticed that transparency of financial policies is accorded a high priority by all financial agencies assessed, and they are in observance of the good practices of the Code of Good Practices on Transparency in Monetary and Financial Policies. The major agencies disclose their objectives, their legal and institutional frameworks, and have open processes of policymaking and regulation. The principles of transparency are observed by dissemination of relevant information to the public and in the agencies’ arrangements for internal conduct, integrity, and accountability. However, the staff noted that the framework for supervision and regulation applicable to mutual insurance firms is not as well defined and suggested to improve its transparency. The transparency of monetary policy was not assessed by the Fund team as the Banque de France is a member of the European System of Central Banks and no longer conducts independent monetary policy.

Subsequently, the framework for supervision and regulation applicable to a specific group of mutual insurance firms was modified in a number of steps. In August 2003, legislation created a single supervisory body, the Commission de Contrôle des Assurances, Mutuelles et Institutions de Prévoyance (CCAMIP) by merging the regular insurance supervisor (CCA) and mutualities’ supervisor (CCMIP). Coordination with the banking sector supervisors was strengthened and the powers of the supervisory authorities extended.

France—Report on the Observance of Standards and CodesIMF Country Report
(ROSC): Data ModuleNo. 03/339, 10/2903
Data Module—UpdateIMF Country Report
No. 04/345, 11/03/04
Data Module—UpdateIMF Country Report
No. 05/398, 11/07/05

Summary: The report found that France is in observance of the Fund’s Special Data Dissemination Standard (SDDS). In particular, the mandate of INSEE and the Banque de France for the production of the six macroeconomic datasets is clearly defined, with the reporting burden and the confidentiality provisions given special consideration notably through the CNIS. Professionalism is central to the statistical operations of the two institutions, internationally and/or European accepted methodologies are generally followed, the degree of accuracy and reliability of the six datasets is remarkable, statistics are relevant and provided on a timely basis, and they are accessible to the public.

The report made a number of suggestions for further improvements: the responsibility of INSEE as the producer of government finance statistics should be clarified; data sharing between the Banque de France and the rest of the French statistical system improved; classification and valuation methods in balance-of-payments statistics reviewed; consistency between the current account of the balance of payments and the goods and services account in the national accounts improved; the timing of revisions in the quarterly and annual national accounts aligned; and identification of data production units of INSEE facilitated.

France continues to implement several of the 2003 ROSC Data Module recommendations, including by promoting a broader understanding of statistical data revisions, making greater use of firm-level data to improve the measurement of changes in stocks, and intensifying work on portfolio investment income with the objective of starting to record those transactions on an accrual basis.

France—Financial System Stability Assessment (FSSA)IMF Country Report
No. 04/344, 11/03/04
FSAP Assessment and Reports on ROSCsIMF Country Report
No. 04/345, 11/03/04
FSAP AssessmentIMF Country Report
No. 05/185, 06/08/05
Publication of FSAP—Detailed Assessment of Observance ofIMF Country Report
Standards and CodesNo. 05/186, 06/08/05

Summary: The report concluded that France’s financial sector is strong and well supervised. No weaknesses that could cause systemic risks were identified. The strength of the system is supported by the financial soundness indicators and the strong conformity to the supervisory and regulatory standards approved by the Basel Committee, IAIS, IOSCO, FATF, and CPSS.

The degree of observance of the transparency code is high in all relevant areas. The French banking sector has been modernized and restructured over the past two decades and is well capitalized. Systemic vulnerabilities in the important insurance sector are well contained. Securities markets are large and sophisticated.

Notwithstanding the strengths of the French financial sector, a number of issues emerged from the FSAP, including (i) concentration in banking may have reached a point where further consolidation could intensify concerns over the scope for collusion and long-term stability where many banks could be considered “too big to fail;” (ii) banks’ large and growing portfolios of fixed-rate residential housing loans could represent a longer-term risk in the event of large increases in funding costs and/or a significant fall in real estate prices; (iii) some administered savings schemes and other policy measures give rise to costs and impede financial market innovation. These schemes are not well targeted to achieve intended social goals and are not well aligned with current priorities, such as strengthening the pension system; (iv) the banking system’s rapid accumulation of capital strengthens banks’ resilience.

This accumulation is harder to control for mutual banks, given their legal restrictions on remuneration of their members. And, for all banks, it could encourage expansion through expensive takeovers and risky new ventures; (v) the supervisory system of the financial sector is composed of specialized segments. Coordination mechanisms need to be further adapted. Additional steps should be considered in the future as cross-sectoral financial groups become more prevalent; (vi) the consolidation of the French stock and futures markets with others in Europe has increased the importance of effective cooperation across national jurisdictions. Moreover, the authorities face the challenge of adjusting to and effectively implementing the significant regulatory overhaul that took place in late 2003; and (vii) the infrastructure for the clearing and settlement of payments and securities is generally sound and modern. However, there is some room for improvement in the clearing and settlement of retail payments and securities, where the multilateral netting systems lack fully adequate safeguards to ensure timely settlement in case of default.

II. France: Statistical Issues

The economic database is comprehensive and of high quality, and data provision to the Fund is adequate for surveillance. The authorities regularly publish a full range of economic and financial data, and calendar dates of main statistical releases are also provided. France subscribes to the Fund’s Special Data Dissemination Standard. The transmission of data in electronic form from INSEE (Institut national de la statistique et des études économiques) and the profusion of data from various institutions (Banque de France, INSEE, ministry of finance, ministry of labor and solidarity) have helped to build an infrastructure, in which all data can be easily accessed through the Economic Data Sharing System. A data ROSC mission conducted an assessment of the statistical system in March 2003, and the report was published in October 2003. A factual update to the main report was published in November 2004.

France’s monetary and banking statistics methodology conforms with the European Central Bank framework, which provides comparable details as the Standardized Report Forms developed by STA. Statistics for International Financial Statistics on banking institutions and monetary aggregates are prepared on a monthly basis and are timely. Monetary data are also disseminated in the quarterly IFS Supplement on monetary and financial statistics.

France follows the European System of Integrated Economic Accounts 1995 (ESA95). Data for GDP and its expenditure components are available from 1978 onwards. Both annual and quarterly accounts provide reliable information, although estimates from the two accounts differ slightly before the quarterly accounts are revised to be aligned to the annual ones. In 2005, national accounts estimates were rebased to 2000 prices.

Government finance statistics have been strengthened recently. Both central and general government data are presented in a more comprehensive fashion than previously and the data for 2006 and 2007 also reflect the various impacts of recent budgetary reform. Although the source data is collected by the Ministry of Economy and Finance, INSEE is principally responsible for the compilation and dissemination of fiscal data in a framework that is consistent with ESA95. INSEE’s website has recently been enhanced; in particular, it includes expenditure tables and government revenues by subsector (central government, miscellaneous central government agencies, local governments, and social security administration).

Balance-of-payments statistics should be interpreted with caution, given large errors and omissions. Greater coherence between the external current account and the rest of the world account in the national accounts is needed. In this regard, work with promising early results has been undertaken on the transportation account.

III. France: Table Of Common Indicators Required For Surveillance

(As of June 30, 2010)

Date ofFrequencyFrequencyFrequency
Exchange Rates05/1006/10MonthlyMonthlyMonthly
International Reserve Assets and Reserve Liabilities of the Monetary Authorities105/1006/10MonthlyMonthlyMonthly
International Investment Position2009Q1:2010AnnualAnnualAnnual
Reserve/Base Money05/1006/10MonthlyMonthlyMonthly
Broad Money05/1006/10MonthlyMonthlyMonthly
Central Bank Balance Sheet05/1006/10MonthlyMonthlyMonthly
Consolidated Balance Sheet of the Banking System05/1006/10MonthlyMonthlyMonthly
Interest Rates 205/1006/10MonthlyMonthlyMonthly
Consumer Price Index05/1006/10MonthlyMonthlyMonthly
Revenue, Expenditure, Balance and Composition of Financing3—General Government4Q1:201006/10QuarterlyQuarterlyQuarterly
Revenue, Expenditure, Balance and Composition of Financing3—Central Government504/1005/10MonthlyMonthlyMonthly
Stock of Central Government Debt05/1006/10MonthlyMonthlyMonthly
Stock of Central Government-Guaranteed DebtQ1:201006/10QuarterlyQuarterlyQuarterly
External Current Account BalanceQ1:201006/10QuarterlyQuarterlyQuarterly
Exports and Imports of Goods and ServicesQ1:201006/10QuarterlyQuarterlyQuarterly
Gross External DebtQ1:201006/10QuarterlyQuarterlyQuarterly

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