(MENAFN) The Governor of the Bank of France, Francois Villeroy de Galhau, has raised alarm about the country's economic future, suggesting that France could experience a gradual economic "suffocation" unless it addresses its persistent budgetary and debt challenges.

In an interview on Saturday, he acknowledged the severity of France’s “serious budgetary problem,” noting that the government’s deficit is expected to remain high at 5.4% of GDP in 2025—only a slight reduction from 5.8% in the previous year.

He emphasized that France must reduce its deficit to 3% by 2029 in order to restore fiscal credibility.

Villeroy de Galhau warned that the country is not at immediate risk of bankruptcy, but that it is on the path to a "gradual suffocation."

He pointed to the growing costs of debt servicing, which are forecasted to rise from €30 billion in 2020 to more than €100 billion by the end of the decade.

The governor also highlighted the impact of rising interest rates, which are increasing borrowing costs for both households and businesses while diverting resources from essential priorities, including defense and the green energy transition.

Furthermore, Villeroy de Galhau expressed concern about the long-term consequences of France’s mounting debt, which is currently at €3.3 trillion ($3.9 trillion), or about 115% of GDP.

He warned that the heavy burden of debt would ultimately be passed on to future generations, including children and grandchildren.

These warnings follow recent downgrades by credit rating agencies. Moody’s revised France’s sovereign outlook from stable to negative, citing concerns over political “fragmentation” that could impede effective policymaking.

Earlier this year, both Fitch Ratings and S&P Global Ratings downgraded France's credit rating to A+, citing similar concerns over fiscal and political risks.

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