Federal accounts show healthy surplus

Hans-Rudolf Merz can feel satisfied with the 2006 accounts Keystone

Switzerland's federal accounts registered a surplus of SFr2.5 billion ($1.99 billion) in 2006, SFr3.2 billion more than budgeted.

The result, which comes after five years in the red, will help reduce the total debt of the confederation from SFr130 billion to SFr125 billion.

Presenting the 2006 accounts on Tuesday, the finance ministry said that the total surplus would be SFr5.7 billion, if the revenue from the sale of shares in telecoms operator Swisscom – SFr3.2 billion – were taken into account.

Swiss Finance Minister Hans-Rudolf Merz described the result as “satisfactory”, adding it was achieved thanks to the economic upswing and discipline on spending.

In a statement, the finance ministry noted that the 2006 had originally foreseen a deficit of SFr600 million.

But thanks to the healthy economic situation, tax revenues had increased by SFr3.6 billion over the previous year to reach SFr54.9 billion.

Brake on spending

Discipline on the spending side had helped put a brake on expenditure, which had risen by SFr1 billion compared with 2005 to reach SFr52.4 billion.

Spending was however SFr300 million lower than foreseen in the budget.

The ministry noted that the 2006 result was linked to the two budget reduction programmes of 2003 and 2004 that resulted in a spending decrease of about SFr5 billion.

It added that the accounts did not include the SFr3.2 billion from the sale of Swisscom shares. Legislation covering the federal finances stipulates that any extraordinary revenues have to be used to reduce the debt.

The ministry statement commented that the 2006 result was a “new step” on the way to improve the situation of the federal finances.

Control costs

It warned that it was now important to build on this achievement by maintaining efforts aimed at controlling costs.

Finance Minister Merz announced in November that the federal finances were in a better state than expected, with a surplus running at more than SFr2 billion.

In 2005 the federal accounts closed with a deficit of SFr121 million, with revenues of SFr51.28 billion and expenditure of SFr51.4 billion.

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Key facts

2006 federal accounts:

Revenues: SFr54.9 billion (+7.1% over 2005)
Expenditure: SFr52.4 billion (+1.9%)
Result: SFr2.5 billion surplus

In brief

The federal coffers benefited in 2006 from the strong upswing of the economy.

Major revenues came from Value-Added Tax (SFr19 billion), direct federal tax (SFr14.2 billion), withholding tax (SFr3.95 billion), tax on mineral oils (SFr4.99 billion) stamp duty (SFr2.89 billion) and tax on tobacco (SFr2.16 billion).

Major expenditures went on social welfare (27.1% of total spending), transport (14.6%), defence (8.5%), education and basic research (7.7%), agriculture (7.2%) and relations with other countries (4.6%).

The number of staff working in the federal administration at the end of 2006 was 32,376. This is expected to fall to about 30,500 by 2010, which corresponds to an average annual reduction of 1.5%.