Confederation gets further into debt and takes new restructuring measures
Published: Wednesday, Feb 14th 2024, 15:40
Updated At: Thursday, Feb 15th 2024, 00:59
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For the second time in a row, the federal government has failed to comply with the debt brake in 2023. To prevent further structural deficits, the Federal Council has decided on further cuts for the coming year. In the medium term, all tasks and subsidies will be reviewed.
Last year, the federal government spent more than the debt brake would have allowed, as the Federal Council announced on Wednesday. The financing deficit in the ordinary budget amounted to around CHF 670 million. For the second year in a row, it is higher than would have been permissible in economic terms. The structural deficit amounted to CHF 350 million.
According to provisional figures from the Federal Finance Administration (FFA), net debt rose by CHF 1.4 billion and now stands at CHF 142 billion. Gross debt according to the Maastricht definition rose by CHF 4.4 billion to around CHF 128 billion because long-term debt in the form of bonds was increased.
A further 350 million in cuts
To ensure that the 2025 budget complies with the debt brake, the Federal Council had already taken various cutback measures amounting to CHF 2 billion in January. For example, lower payments into the railroad infrastructure fund, a reduction in the federal contribution to the ETH Domain and a waiver of the federal contribution to unemployment insurance are planned.
In addition, it has now decided on a linear reduction in low-commitment expenditure amounting to CHF 350 million. This includes areas such as international cooperation, culture, agriculture, regional passenger transport, the environment, location promotion, the own-account sector and administration. The army is to be excluded.
The latest savings decisions concern the so-called transfer and own resources area. Transfer expenditure includes all federal contributions to third parties, for example to cantons, municipalities, institutions and social insurance funds. According to the Federal Council, all of these measures mean that the 2025 budget complies with the debt brake - "provided that no additional additional expenditure is decided".
"Far-reaching measures" planned
Although the Federal Council intends to continue some of these cost-cutting measures in subsequent years, it expects further deficits running into the billions for the years 2026 to 2028. The reasons for this include higher expenditure on AHV, premium reductions, the army and childcare.
Because expenditure for the AHV and the army is growing significantly faster than income, the deficits will increase from year to year in the medium term. In addition, expenditure for refugees from Ukraine will no longer be covered by the extraordinary budget in future. The Federal Council intends to book Status S expenditure amounting to CHF 150 million in the ordinary budget as early as next year. By 2028 at the latest, all migration expenditure will be covered by the ordinary budget.
In the medium term, "far-reaching measures" are needed, wrote the Federal Council. By the end of March, a concept should be available that fundamentally reviews all federal tasks and subsidies. The review should also include legally committed expenditure and existing funds.
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