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Frieden's 2012 budget previsions come true
Economics

Frieden's 2012 budget previsions come true

06.02.2013 From our online archive
Finance Minister Luc Frieden on Wednesday presented Luxembourg's 2012 finances, revealing that the gloomy budget previsions from last year had proven correct, while final numbers will not be known until March.

(CS/BB/Ch.L) Finance Minister Luc Frieden on Wednesday presented Luxembourg's 2012 finances, revealing that the gloomy budget previsions from last year had proven correct, while final numbers will not be known until March.

The final budget calculations for 2012 will take until March to be completed. State spending is currently at 12.2 billion euros, which is expected to rise to 12.5 billion euros in the final balance.

This would mean a deficit of 1.3 to 1.6 billion euros.

While these numbers are hardly reassuring, Frieden said it was positive that the deficit had developed as predicted, showing that the savings measures had taken the desired effect. Still, he said much remained to be done to get Luxembourg's state finances back on track.

Total income rose slightly to 10.9 billion euros, up from 10.8 billion euros in 2011. VAT income rose by 300 million euros to a total sum of three billion. However, Frieden warned that the additional income was largely due to e-commerce VAT which the Grand Duchy will lose out on under new EU regulations coming into effect in 2015.

E-commerce tax on the whole accounted for 720 million euros in 2012, a record high.

Frieden said that the government was committed to limiting any increase of the deficit. However, he said that a balanced budget would take time.

He added that economic growth was a key component of higher income. Tax increases would meanwhile run the danger of decreasing the purchasing power of households as well as the growth of companies, he said. Therefore, Frieden commented, it was also important to limit expenses.

“Growth and budgetary discipline need to go hand in hand,” he concluded.