Finance Minister Gilles Roth has suggested that Luxembourg’s central government could end 2024 with a smaller deficit than expected, possibly even achieving a "positive balance".

On Wednesday, Minister of Finance Gilles Roth told the Chamber of Deputies that the general government's budget could potentially end with a "positive" balance in 2024.

While cautioning that he is "knocking on wood," Roth indicated that the deficit could be as low as €500 million by the end of the year, adding that there is even a chance of a "positive balance" for 2024. This is a significant improvement from the €1.9 billion deficit initially projected in the spring. The current deficit stands at €1.4 billion, excluding social security funds and local authorities.

Roth attributed the improvement to rising revenues, particularly from income tax and corporate tax. He highlighted that several large companies have made "extraordinary profits" this year.

The positive fiscal trend is also due to lower-than-expected government spending. Minister Roth noted that some planned expenditures, such as equipment deliveries for the army and railways, were not realised, and not all government positions were filled.

This aligns with a recent assessment by the National Council for Public Finance, which concluded that the government had consistently underestimated revenues and overestimated the deficit. Roth acknowledged that the figures available at the end of 2023, shortly after the elections, were overly pessimistic.

Public debt projections and future deficit

Looking ahead, Minister Roth outlined government spending priorities and financial aid measures designed to relieve individuals and businesses. These initiatives are expected to result in a €500 million loss in revenue by 2025.

For 2025, Roth expects a smaller deficit for central government, estimated at €1.29 billion–€500 million lower than initially forecast. This is largely due to slower growth in the State's operating costs, despite high levels of investment, which are projected at 4.6% of GDP–higher than in the period between 2014 and 2022.

Roth also projected that public debt will represent 26.7% of GDP in 2028.

Following the Minister's speech, MPs began debating the draft budget and multi-year budget. The vote is scheduled for Thursday.