France warns of over $7B impact from international crisis on public finances

France warned Wednesday that the international crisis is weighing on public finances, estimating the cost at around €6 billion (nearly $6.4 billion), according to the public action and accounts minister after a Cabinet meeting.

“The cost of the war is now estimated at around €6 billion (nearly $7.04 billion) for public finances,” David Amiel said, adding that more than €3.6 billion (nearly $4.2 billion) is linked to rising interest rates and inflation.

Amiel said the figure reflects both direct and indirect economic effects of the current geopolitical situation.

He said rising interest rates, which he described as a global trend across developed economies, have significantly increased France’s debt servicing costs.

“Interest rates are increasing, in France as in all developed economies,” he said.

The government also pointed to broader pressures from slower growth and higher inflation forecasts compared with pre-crisis expectations.

The remarks followed a Cabinet review of France’s 2025 public accounts, which showed the deficit narrowing to 5.1% of gross domestic product from 5.8% in 2024.

Officials said the improvement was driven by budget control measures but warned that geopolitical developments continue to cloud the fiscal outlook.

On Tuesday, US President Donald Trump extended a two-week ceasefire with Iran to allow time for Tehran to prepare a “unified proposal,” following a request by Pakistani officials.

Washington has called for the reopening of the Strait of Hormuz, which has remained largely closed since the US and Israel launched attacks on Iran on Feb. 28.

Tehran declared the strait open Friday but closed it again a day later after Trump said the blockade of Iranian ports would continue. On Sunday, US forces detained an Iranian cargo ship after opening fire and boarding it.

Pakistan brokered a two-week ceasefire between the US and Iran on April 8, followed by talks in Islamabad on April 11 and 12 attended by senior delegations from both sides, but no agreement was reached.

The ceasefire had been set to expire Wednesday, but Trump extended it without announcing a new timeframe.