Jeroen Dijsselbloem, the president of the 17-nation euro bloc of nations, said France needs to accelerate its reform program after the country was given a two-year extension to meet European Union budget-deficit targets.
"France has to push forward its program. They've now been given two more years to reach their deficit goals. Part of the deal should be they push forward their reforms, and I'm sure that the French government is committed to those reforms," Dijsselbloem told CNBC on Saturday on the sidelines of a meeting of G7 finance ministers and central bankers in Aylesbury, England.
French President Francois Hollande's popularity has fallen to a new low with 3.2 million French workers unemployed as growth has remained elusive. France's budget deficit will hit 3.9 percent of GDP this year and rise to 4.2 percent in 2014, above the 3-percent European Union target. Hollande's Socialist government has been accused of being slow to pursue structural and labor reforms while aiming to raise taxes on the rich via a new wealth tax. On Wednesday, France will release first-quarter GDP data.
Earlier this month, the European Central Bank cut benchmark interest rates to a record low of 0.5 percent and extended assistance to banks in an effort to help ease the recession in the euro zone.
But, Dijsselbloem warned that monetary expansion can't go on forever and European countries need to prioritize structural reforms and fiscal consolidation.
"Monetary policy can really not help us out of the crisis. It can take away the pressure, it can accommodate new growth," Dijsselbloem said. "But what we really need in all countries is structural reforms in the first place."
"I'd just like to stress the point that in the policy mix of fiscal policy, monetary policy and structural reforms — I'd like the order to be exactly the other way around. Structural reforms in the first place, fiscal policy and viable targets in the mid-term for all regions in second place — and monetary policy can only accommodate domestic economic problems in the short-term."
Dijsselbloem said he was confident the euro zone will make progress on a banking union and put in place a process for bailing in banks before the summer, though a decision may not be made at the next Eurogroup meeting starting on Monday. The need to establish a clear process for rescuing troubled banks became apparent after policy makers intervened to rescue Cyprus' banking industry in March,enforcing losses on bank depositors for the first time in the four-year old euro zone debt crisis.
"We need to make clear both to depositors and financial markets how in the future we will deal with that in Europe. I think we're making good progress," Dijsselbloem said.