Economy & Politics

A public deficit of 2.9 billion euros

On Monday, the Minister of Finance presented to members of the Finance and Budgetary Control Committee the development of public finances until the end of August.

On Monday, the Minister of Finance presented to members of the Finance and Budgetary Control Committee the development of public finances until the end of August.

(ASdN with Michèle Gantenbein) – The health crisis places a heavy burden on public finances. According to figures presented on Monday by Minister of Finance Pierres Gramegna (DP), the deficit reached 2.9 billion euros as of August 31, 2020. Compared to the same period last year, spending therefore increased by 17.7% while revenues decreased by 9.6%. In total, the deficit in the public treasury therefore amounts to nearly four billion euros.

The aid measures taken by the government during the containment were too broad given the current state of public finances. This is in any case the opinion expressed this Friday by the former director of the Treasury, Georges Heinrich.

A bad for a good. In fact, in these times of health crisis, the additional expenditure is due to measures taken by the State to support the economy, in particular through partial unemployment. According to Diane Adehm (CSV), chairman of the Committee on Budgetary Control, it has so far cost the state around 800 million euros.

If the state coffers are empty, they also take time to fill. The reason: the government gave companies a delay in payment. Receipts which are therefore lacking now, although they will be due at a later date.

The financial sector, on the other hand, turned out to be a stabilizing factor. Tax revenue has indeed increased slightly, reveals MEP André Bauler on Monday. In addition, the state has never had liquidity problems with some 2.1 billion euros in liquidity on the meter. At the end of September, the Luxembourg government also borrowed 1.5 billion euros on the capital market via bonds.

A deficit of five billion in forecast

As for the balance of accounts for 2019, it ends with a deficit of 128.8 million euros instead of 815.3 million euros, announced Pierre Gramegna on Monday. The reason for this lower deficit is the increase in tax revenue, which was almost 5% higher than forecast.

Wissen, Wirtschaft, Bau, Bauarbeiter, Hammer, Handwerker, Sonnenuntergang (Foto: Shutterstock)

The labor market and public finances will be seriously impacted by the economic consequences of the covid-19 pandemic, the statistics institute announced on Thursday. The latter also expects Luxembourg’s GDP to record “a decline of 6%” this year.

However, the government had not overestimated spending so much. The latter only deviate by 0.71% from the estimated budget voted. Instead of a surplus of 700 million euros, the government forecasts a public deficit of five billion euros in 2020. In other words, according to European budgetary rules, the government will have a surplus of 60 million euros in 2019 In the voted budget, he had forecast a deficit of 650 million euros.

Prime Minister Xavier Bettel (DP) and Pierre Gramegna are expected to clearly announce this week the measures the government intends to take to restore balance to the national budget. For his part, the Minister of Finance also announced tax measures on Wednesday in order to guarantee justice and fight against abuse. The focus will be on stock options and the Specialized Investment Fund (SIF) in the real estate sector.


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