Economy & Politics

The state deficit less heavy than expected … in 2019

While public spending for this year is soaring and revenues lower than expected, Luxembourg’s budget for last year was better than initially expected. In deficit however.

While public spending for this year is soaring and revenues lower than expected, Luxembourg’s budget for last year was better than initially expected. In deficit however.

(pj with Susy Martins) Some will see a glass half full, others half empty. In any case, the country’s real budget deficit for 2019 would be less deep than envisaged at the time of establishing the forecasts for the public accounts. The information appears in the report on the budget execution project that the Minister of Finance, Pierre Gramegna (DP), has just tabled in the House.

Thus, the government had counted on a hole in the coffers of 815.3 million euros for last year. The difference between income and expenditure would be “only” 128.8 million euros. How to explain the difference of 686.5 million euros? Obviously due to tax revenues much greater than expected. Their final amount exceeding by 4.87% the “fit” initially planned by the executive.


The Minister of Finance sees public spending spinning faster than expected at the time of presenting his 2020 budget. But the deficit observed today, in the eyes of Pierre Gramegna “strengthens the capacity of the economy to restart”.


Regarding the spending of the 2019 budget, on the other hand, the various ministries have obviously worked wisely, according to the envelopes intended for them. Pierre Gramegna announces a difference limited to 0.71% compared to the expenses which had been envisaged. Enough to make the Luxembourg treasurer say that, at the start of 2020, the public accounts were close to balance and that the budgetary situation was healthy.

Since then, we know that the fine ordering of public accounts has been upset. The covid-19 epidemic – unpredictable at the time of the presentation of the 2020 budget – upsetting the distribution of the 20 billion euros. Since then, all of the measures put in place last March had to be taken on board. Partial unemployment, cost of leave for family reasons, management of the health crisis, stimulus aid, support for many parts of the national economy.

Even if Luxembourg’s good financial health (still confirmed by the triple AAA rating agencies) has enabled it to benefit again from loans at negative rates, the State expects a major deficit for 2020. According to the latest official estimates, this one could reach millions of euros. And this time it is difficult to see the glass fill up again, even if the latest Statec forecasts are cautious optimism about the fate of national activity.

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