On Monday 19 October 2020, Luxembourg's Minister of Finance, Pierre Gramegna, presented the quarterly public finance situation as of 30 September 2020, during a joint meeting of the Finance and Budget Committee (Cofibu) and the Control Committee of budget execution (Comexbu) of the Chamber of Deputies, Luxembourg's parliament.
Central Administration revenues show a deterioration compared to the same period in 2019. According to the 2010 perspective, total revenues decreased between September 2019 and September 2020 by around €1 billion, or -7.1%. This decrease is linked to the tax measures put in place to meet the liquidity needs of businesses. Cancellations of advances and direct tax payment deadlines represent capital losses of around €228 million as of 30 September 2020. VAT refunds amounted to €1.36 billion, which represents an increase of +9.4% compared to the same period in 2019.
As regards expenditure, these increased by around €2.4 billion compared to the situation observed at the end of September 2019. This increase of +17.4% is linked to the high investments undertaken in the context of the COVID-19 crisis and the acquisition of military aircraft. Investments in the third quarter of 2020 amounted to some €2 billion, including aid to companies, which corresponds to an increase of 30% compared to last year.
Taking into account this negative effect, the balance of the Central Administration deteriorated by €3.5 billion compared to September 2019. The balance of the Central Administration was therefore in deficit as of 30 September 2020 of €2.75 billion.
As for the figures established according to the State's accounting rules at 30 September 2020, revenue collected corresponds to 66.7% of the total budget voted for 2020, i.e. 8.3 percentage points less than the rate of 75% that can be expected after 9 months. On the total expenditure side, an execution corresponding to 84.8% of the voted 2020 budget can be seen, therefore an execution rate of 9.8 percentage points higher than the rate to be reached at the end of September.
Minister Gramegna underlined "As the figures as of 30 September 2020 show, the COVID-19 pandemic continues to negatively affect the public finances of our country, both for revenue and expenditure. Thanks to the prudent fiscal policy of the past few years, however, the government has all the financial capacity to face the economic challenges in an intelligent and proportionate manner. I also welcome the first signs that point to a stabilisation in tax revenue. However, it is important to remain very cautious for the months to come given the deficit accumulated since March 2020 and the many uncertainties surrounding the future course of the COVID-19 pandemic."