Luxembourgish Parliament Debates 2024 Budget, Focusing on Economic Diversification and Fiscal Responsibility

The Luxembourgish Parliament is currently debating the 2024 budget, with a focus on plans and projections for the upcoming year. On Wednesday, Finance Minister Gilles Roth and Minister for the Economy Lex Delles presented the budget plans to the deputies, highlighting key areas such as sustainable finance, poverty prevention, housing, and economic diversification.

Roth announced a 10-point action plan to develop Luxembourg's sustainable financial ecosystem over the next five years. He also committed to providing tax relief for taxpayers in class 1A, mostly divorced or widowed people, over the next year. However, measures to cushion the rise in energy prices, including the price cap, will expire in 2025 as per demands from the EU Commission and the European Central Bank.

The government forecasts national debt to rise to €22.2 billion by the end of 2024, representing 26.5% of GDP, which is below the previously set 30% threshold. The amount the state spends on repaying current loans will continue to rise, from €125 million to €500 million in 2027. Roth defended measures to stimulate the housing market and announced plans by Prime Minister Luc Frieden to convene a housing roundtable.

Why this matters: The 2024 budget debate in Luxembourg highlights the country's efforts to balance economic growth, social welfare, and fiscal responsibility in the face of global challenges. As a key financial hub in Europe, Luxembourg's economic policies and diversification strategies have far-reaching implications for the region and beyond.

Minister for the Economy Lex Delles emphasized the importance of diversifying Luxembourg's economy, with the government considering various options such as fintech legislation, ambitious space sector investment, and even building drones. The financial sector remains vital to Luxembourg's economy, employing over 64,000 people directly or indirectly, with another 135,000 jobs dependent on it.

Roth claimed the central government's budget deficit would not be as high as anticipated earlier this year, largely due to increased state revenue and lower expenses than recent years. He proposed a 'debt brake' where the state could only spend as much as it recouped from taxes or other revenues, stating it was a question of responsibility.

The Luxembourgish Parliament will vote on the budget and multi-year budget bills, as well as the 2022 state accounts, on Thursday. The debate on the 2024 budget underscores Luxembourg's commitment to maintaining its strong economic position while addressing social issues and preparing for future challenges in an ever-changing global landscape.

Key Takeaways

• Luxembourg debates 2024 budget, focusing on sustainable finance, poverty, housing, diversification.
• Govt forecasts national debt to rise to €22.2B by 2024, below 30% GDP threshold.
• Measures to cushion energy price rise to expire in 2025 per EU/ECB demands.
• Govt plans to diversify economy through fintech, space sector, and drone development.
• Parliament to vote on 2024 budget, highlighting Luxembourg's economic, social commitments.