Fiscal Consolidation Pays off for Luxembourg as Debt Falls to 13.4% of GDP

Luxembourg's Minister of Finance, Pierre Gramegna, has informed Cofibu today about the state's financial situation and the evolution of public debt; the good financial situation of the Luxembourg State will make it possible not to resort to a bond issue in 2016.

The updated forecast for consolidated general government debt (according to SEC2010) stands at €11 billion, or 20.5% of GDP. At the end of 2016, central government debt amounted to €7.1 billion, or 13.4% of GDP.

Since the arrival of the current government, the State has not had to resort to debt financing. In view of the good progress of the budgetary situation, no borrowing will be issued this year either, despite the full repayment of bank loans to the amount of €400 million in February 2016.

As a result, the level of central government debt fell between 2013 and 2016 from 15.7% to 13.4% of GDP.

The same trend is observed in the public administration, where the debt fell between 2013 and 2016 from 23.5% to 20.5% of GDP.

The analysis also shows that in absolute terms, public administration debt as a whole has remained stable over the period 2013-2016, even though it has even fallen slightly at the level of the central government. The level of indebtedness thus remains well below that projected for 2016 in the multi-annual projects of previous years. Similarly, it remains below the level assumed during the preparation of the draft budget for 2017.

Correlatively, the annual interest expense decreased from €218 million in 2013 to €201 million in 2016. The government continues to implement a strategy to optimise public debt management during the currently very low level of interest rates.

Minister Gramegna commented "The figures clearly show that our fiscal consolidation policy is paying off. The spiral of indebtedness is permanently broken. The level of indebtedness is now not only lower than in 2013, it is also lower than the previous projections. These developments are all the more remarkable as the government continues to maintain investments at a record level to prepare the country and its infrastructure for the challenges of the future."