Adehm is set to participate in putting together the report on the 2024 budget in May and December this year. The first months of 2024 were budgeted on a provisional basis due to the elections and subsequent change in government last autumn. Minister of Finance Gilles Roth is still conducting bilateral negotiations with various ministries, so work is yet to properly begin on the 2024 draft, which is due to be tabled in the Chamber of Deputies on 6 March. Although the contents are currently unknown, Adehm says she already knows the starting point.
In recent years, the government’s spending has been vast, exacerbated by the Covid crisis and the subsequent energy crisis, with the result that 2023 ended with a state deficit of around 630 million euros. Adehm says this year’s road map is to maintain Luxembourg’s Triple A status, with a guideline of keeping public debt below 30% of the country’s GDP. However, she stresses this is just a guideline: “If it becomes necessary to cross this line in the short term, we will do it. But in the medium term, we are aiming to keep debt below 30%.”
Even though revenues increased in 2023, expenses rose two-fold. The CSV-DP government is determined to take action with regards to spending, with Roth commenting that the state will have to “tighten their belts” from 2025. In real terms, Adehm says all spending will have to be reviewed, citing examples such as building housing at lower cost, reducing government participation in the purchase of buildings such as ArcelorMittal’s K22 in Kirchberg, or even hiring government employees with other profiles. However, she interjects that this does not necessarily mean reducing pay for new hires.
The CSV MP says that raising taxes to generate additional government revenue is still “out of the question”. Is the new majority government accepting the fact that the gap between rich and poor is continuing to widen? Adehm says social transfers should be much more selective and that the government should no longer make “everything free for everyone”.
The draft budget report will have a focus on Luxembourg’s financial centre, Adehm reveals. She plans to ascertain whether the latter remains the country’s “cash cow”, whether this is through the money coming directly from Luxembourg’s financial hub, or through the number of jobs generated.
