Economy & Politics

Luxembourg’s stabilization plan highly rated

The effort of anti-crisis measures in relation to the wealth produced in the Grand Duchy is significant. It should reach almost 19% of national GDP. A ratio that ranks the country among the five states most committed to supporting its economy in relation to its economic capacity.

The effort of anti-crisis measures in relation to the wealth produced in the Grand Duchy is significant. It should reach almost 19% of national GDP. A ratio that ranks the country among the five states most committed to supporting its economy in relation to its economic capacity.

Each state has its own economic stabilization program linked to the covid-19 crisis. That of Luxembourg, initially up to 8.8 billion euros (presented on March 23) has already undergone numerous adjustments and has been backed by a 2.5 billion euro loan. This national effort has just been highlighted by a study by a professor of economics at Columbia University, Ceyhun Elgin. The latter comparing the importance of the plans decided in relation to the gross domestic product of each nation.

From the study of 166 countries, it emerges that the Grand Duchy finds itself in third place in the world in the intensity of the shield put in place to counter the economic effects of the epidemic. Far ahead of France (20th position) or Germany (15th rank). If Malta and Japan take over the first two markets, Luxembourg with an expenditure announced at the level of 19% of its GDP is ahead, excuse the United States.

Other economists, however, dispute the list established by Ceyhun Elgin. In fact, his research takes into account only the efforts indicated by the governments but not the actions carried out, for example, by organizations such as the central banks of these same states. Which could upset the ranking order somewhat.

Public debt rises

Just as account should be taken of the capacities of countries to be able to assume the emergency rescue measures. The economy of some states, including Luxembourg, is more stable and strong than elsewhere. This is what has enabled the Minister of Finance, Pierre Gramegna (DP) to already obtain financing at a negative rate for the crisis loan launched last April. A rate obtained thanks to the confidence of global private lenders in the pursuit of national post-crisis activity, but also of Luxembourg investors who have shown solidarity.

But beware of managing public debt in the coming months. Pierre Gramegna sees it climb to 17 billion euros.

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