Economy & Politics

Public finances, other victims of the virus

Over the first three months of the year, the revenues earned by the state fell (-8.4%) while spending jumped 28.5%, according to data published Monday by the Ministry of Finances. In question, the aid measures put in place by the government to respond to the health crisis.

Jean-Michel HENNEBERT

Over the first three months of the year, the revenues earned by the state fell (-8.4%) while spending jumped 28.5%, according to data published Monday by the Ministry of Finances. In question, the aid measures put in place by the government to respond to the health crisis.

Unsurprisingly, the figures presented Monday morning by Pierre Gramegna (DP) to the members of the Finance and Budget committee are not good. Over the first three months of the year, compared to the situation at the same period in 2019, revenues and expenses appear in red. An 8.4% drop in revenue and a 28.5% increase in spending compared to the first quarter of 2019, according to data put forward by the Minister of Finance, who mentions “the consequences of the crisis linked to the covid-19 pandemic ”.

Compared to the whole of the year, this poor first quarter of 2020 corresponds to “a drop in revenue of 12% and an increase of 8%”, notes the press release from the Ministry of Finance, published on Monday. An equation that causes “a significant deterioration in the budget balance,” said the press release. Not surprisingly, the confinement and partial closure of the borders of neighboring countries had a direct impact on the revenue of the customs and excise authorities. Gasoline sales fell 19% between January and April 2020, compared to 2019, compared to 22% for diesel sales.


Politik, Sommerinterview Pierre Gramegna, Minister der Finanzen, Foto: Guy Wolff / Luxemburger Wort

The restart pact, announced Wednesday by the Prime Minister, was detailed by the Minister of Finance. An additional plan of “700 to 800 million euros” dedicated to allowing everyone to “play the game of liquidity”.


In April, the revenue collected by the three tax administrations – administration of direct contributions, administration of Registration, Domains and VAT and administration of customs and excise – amounted to 5.2 billion euros . Or a difference of 284 million euros, compared to the same period in 2019. Or “a capital loss of 10% compared to a third of the annual amount provided for in the 2020 budget,” notes the Ministry of Finance, who is now warning and already that “this negative trend is likely to accelerate further in the coming months”.

As of April 30, the total envelope planned to support the economy amounts to 2.2 billion euros, to which will be added the announced measures of the stimulus plan costing between 700 and 800 million euros. Unsurprisingly, the main item of expenditure in this period of crisis remains the funding of short-time working which represents “actual expenditure” of 566 million euros. Or the equivalent of the entire tram project. In the end, the Ministry of Finance indicates that the central government balance has “substantially deteriorated” to reach, at the end of April 2020, a deficit of 1.6 billion euros.


The Luxembourg state has already spent 725 million euros to support partial unemployment measures since mid-March. But the device will be maintained “until December 31, at least” announced the Minister of Labor.


Note that in its analysis, the Ministry of Finance indicates that the first quarter of 2019 was marked by low spending due to the use of “the procedure of” provisional twelfths “”, namely the use of non-credit levels not on the 2019 budget data, but on that of 2018. This is due to the legislative delay linked to the holding of legislative elections in October 2018. Taking this element into account, the impact of the health crisis would have been less strong, since the Ministry of Finance evokes, for the first quarter, a slight decline in revenue (-0.8%) compared to 2019 and an increase in spending of 19.4%.

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