State Revenues Up 6.2% for 2017 Q3; Public Finances on Sound Footing

On Friday 27 October 2017, Pierre Gramegna, Luxembourg's Minister of Finance, presented the State's budgetary situation including the first three quarters of the year (2017) to the Finance and Budget Committee and tothe Commission of the control of budget execution.

Overall, the situation at the end of September 2017 is in line with the budget execution observed during the first two quarters. Revenues and expenses are very close to the budget estimates for 2017.

According to the European Standard SEC 2010, revenue of the Central Administration is €12,572 million, against €12,580 million in terms of expenditure. Revenues grew more significantly than spending, i.e. +6.2% vs. + 5.7%. This development reflects a positive scissors effect, a sign of responsible fiscal policy. As a result, the Central Administration balance improved by + €56 million compared to the same period in 2016 and now stands at -€8.5 million, close to equilibrium.

At the end of Q3, revenue from tax administrations stood at 76.1% of the budget voted for 2017. Despite the entry into force of the tax reform on 1 January 2017, direct taxes are set at a higher leve compared to the same period of the previous year. This favourable trend reflects in particular the good economic situation in Luxembourg. In this context, it should be recalled that VAT revenues from electronic commerce now represent only €72 million, against nearly €1 billion in 2014.

At the level of expenditure, trends of the previous years are continuing, namely operating costs being under control (-0.7% compared to the same period of 2016) and an ambitious investment policy. Direct investment increased by €106.9 million, or 9.1% compared to the same period in 2016.

The presentation of the figures according to the State Accounting Law shows a balance of -€606 million, an improvement of +€245 million compared to the same period of 2016. In order to ensure the comparability of the figures, this amount does not take into account borrowing revenues as well as depreciation and interest charges from the public debt fund. Including these amounts, the balance at the end of 2017 Q3 amounted to +€1,023.2 million.

Minister Gramegna commented "The situation of the accounts in the third quarter of 2017 shows a serious budgetary policy and the good evolution of the Luxembourg economy during the year 2017. The balance of the Central Administration according to the European Standard SEC 2010 has improved by €56 million compared to the same period of 2016 and is now close to equilibrium. This is the best result in 5 years. However, the year is not over yet and we must continue to execute the budget in a rigorous and careful way."