PARIS (Reuters), – It is crucial that post-pandemic debt levels are brought down to more sustainable levels by higher interest rates, said the head of France’s central bank on Tuesday.

France borrowed heavily in the aftermath of the pandemic in order to stabilise the economy. In 2019, the public debt was just below 100% of GDP. Last year, it reached nearly 113%.

Nevertheless, debt in the country was not a major issue in discussions that preceded last month’s election in which Emmanuel Macron easily won a five-year extension.

Parties are gearing up to run for the June legislative elections. Many candidates focused on policies that will increase debt, as many of their focus was shifting towards these issues. A hard-left leader in a left-leaning coalition seeking to win a majority, wants to see the retirement age lowered to 60 from 62.

Villeroy, France’s fiscal watchdog said that too many people consider debt “have no limit or cost”, after excessive borrowing in times of crisis and the European Central Bank’s plan to increase interest rates to combat record inflation.

Villeroy also serves on the governing board of the European Central Bank. He stated that “our council of governors will make every effort to fulfill our primary mandate, price stability,”

He added that it was crucial for the budgetary authorities to make sure debt sustainability is maintained as interest rates rise.

It is estimated that France’s annual debt servicing expenses are impacted by each 1 percent increase in interest rates. This amounts to 40 billion Euros ($42 Billion).

France’s debt could be reduced to below 100% within a decade if it caps spending growth at 0.5% per annum, roughly half the amount that was averaged in the preceding decade.

($1 = 0.9497 euros)