Mélenchon Proposes Erasing One-Fifth of France’s Debt via Central Bank
Presidential candidate Jean-Luc Mélenchon suggested that, if elected, he would order the Banque de France to cancel roughly 18 % of France’s sovereign debt.
Jean-Luc Mélenchon, leader of La France Insoumise and presidential hopeful, announced that he would direct the central bank in Paris to eliminate about 18 % of the nation’s debt holdings. France’s debt has climbed to over €3.5 trillion, representing 117.5 % of its GDP, after years of high spending and economic slowdown. Critics, including economist Olivier Redoulès of the Rexecode Institute, argue that wiping out debt would effectively amount to new money creation, triggering price spikes and eroding trust among France’s lenders.
They caution that the country would still need to cover an estimated €100 billion annual shortfall, likely requiring austerity measures or tax hikes. Such a move could also breach EU fiscal thresholds and potentially lead to France’s removal from the eurozone. The suggestion follows Mélenchon’s earlier calls for radical policy shifts, such as withdrawing from NATO.
Why it matters
The plan threatens France’s fiscal credibility, could spark inflation and jeopardize its standing in the EU and eurozone.
In this story
