Evolution of public debt, 2005-2022; Credit: Ministry of Finance

Today, Luxembourg Finance Minister Pierre Gramegna presented to the Chamber of Deputies the 19th update of Luxembourg's Stability and Growth Programme (PSC) for the period 2018 to 2022.

Owing to the good economic outlook in Europe and following the government’s many growth-inciting measures, the Luxembourg economy is expected to continue on a positive trend in the coming years, with a growth predicted to exceed 4% between 2018 an 2020, before moving towards 3% in 2022. Similarly, employment will continue to grow at a rate of 3% per year, which means that unemployment will continue to fall to a level close to 5%.

The Central Administration closed the 2017 financial year with a better budgetary situation than expected. While the deficit had been estimated at €1,039 million, it was finally only €220 million. This result is all the more remarkable as the year 2017 was marked by the implementation of tax reform, the gradual disappearance of VAT revenues on electronic commerce and the implementation of reforms of the service voucher system and parental leave, as well as public investments rising again to record levels.

It has been established that the balance of the Public Administration as a whole in 2017 was a surplus of €858 million, corresponding to +1.5% of the GDP. Moreover, during the period 2018 to 2022, the central government balance will gradually improve, reaching- for the first time since 2008- a surplus of €126 million in 2021 and €202 million in 2022. The public administration as a whole is expected to post a surplus of €1,735 million in 2022 (+2.4% of GDP).

Finally, Finance Minister Gramegna referred to Prime Minister Xavier Bettel’s State of the Nation yesterday which reflected on the government’s desire to keep its promises for the future, including those related to public finances, tax reform and respecting European Union criteria.