An exchange traded fund indexed to French stocks fell 5% Wednesday morning on worries over the country’s banking sector.

Societe Generale shares were down sharply. France’s President Nicolas Sarkozy was holding an emergency government meeting to discuss Europe’s debt crisis, the Associated Press reported Wednesday.

The iShares MSCI France (NYSEArca: EWQ) slipped 5%.

The French economy is weakening as the country grapples with its rising deficit.

The IMF cautioned that external risks stemming from the Eurozone crisis could shake the stability of the French economy and stated that the country’s banks were “significantly exposed” to peripheral countries, reports William Horobin for The Wall Street Journal. The organization also noted that French banks should increase capital to meet the new capital-adequacy ratios.

“France cannot risk missing its medium-term fiscal targets given the need to strengthen implementation of the [euro zone’s]Stability and Growth Pact and keep borrowing costs low by securing France’s AAA-rating,” according to the IMF’s annual report.

It also warned that France’s debt and deficit levels were higher than other European countries with a triple-A rating. France’s government deficit was 7.1% in 2010. Sarkozy plans to bring down the deficit to 3% by 2013, which is in line with the Eurozone pact of keeping deficits below 3% of GDP.