European Economic Commissioner Valdis Dombrovskis said there were no current signs of a new eurozone sovereign debt crisis, while urging governments to exercise fiscal caution as borrowing costs rise.
Speaking at the International Monetary Fund’s meetings in Bangkok, he stressed the importance of France adopting its 2027 budget promptly. He also noted that Europe’s relatively long debt maturities give governments time to respond before higher market yields substantially increase servicing costs.
France has become a focus of investor concern as political uncertainty complicates efforts to control its public finances. Earlier this month, eurozone finance ministers urged Paris to approve a credible budget to restore market confidence. French 10-year government bond yields had risen nearly 80 basis points since the beginning of September, approaching 5%, Reuters reported on October 8.
Higher yields make new borrowing and refinancing more expensive, potentially leaving governments with less room for public spending. France plans to issue a record €340 billion in bonds in 2027 to finance government operations and refinance existing debt, adding urgency to efforts to reassure lenders.
Bank of France Governor Emmanuel Moulin separately acknowledged that rising long-term yields were tightening financial conditions. Speaking at the Bangkok meetings, he expressed confidence that France could achieve meaningful deficit reduction through sustained fiscal adjustments. IMF Managing Director Kristalina Georgieva also urged highly indebted economies to strengthen their public finances, warning that restoring confidence takes time.
