Federal budget sees surplus this year

Finance Minister Hans-Rudolf Merz has something to smile about Keystone

The state of the Swiss federal finances is better than expected this year, running a more than SFr2 billion ($1.6 billion) surplus, the government said on Wednesday.

This content was published on November 1, 2006 - 15:17

It said a robust economy and budget cuts led to the positive result. The forecast for this year had foreseen a deficit of SFr697 million.

In total the surplus will amount to SFr2.2 billion. Not taken into account is the SFr2.1 billion income generated by the sale of shares in the country's main telecoms operator, Swisscom, earmarked for deficit reduction.

"This very positive result is pleasing and represents an important step in the rehabilitation of federal finances and contributes to the stabilisation of debt," said the ministry in a statement.

The good news is mainly due to an income boost from mid-year and government measures to save money, Finance Minister Hans Rudolf Merz told a media conference in Bern.

These "sometimes painful" cutbacks, which has seen the government reduce spending by SFr5 billion, are bearing fruit, explained the minister. The good economic situation has also played its part, added Merz.

Last year the federal budget closed with a deficit of SFr121 million but this was far below the planned deficit of SFr1.8 billion.

But Merz warned that the budget was not yet out of the woods. He said there had been several developments since the 2008-2010 budget was approved earlier this year that could have a negative impact on the federal finances.

2008 should be a particularly problematic year with an extra SFr4.1 billion budgeted for the infrastructure funds for improving the country's road network. Other financial burdens include a rise in research spending and money needed for vaccines in case of a pandemic.

Therefore the cabinet has decided to set its priorities on stabilising debt and continuing its belt-tightening measures.

swissinfo with agencies

Key facts

Federal accounts (in billion SFr):

2005: revenue SFr51.28 expenditure SFr51.4 deficit SFr0.12
2004: revenue SFr48.63 expenditure SFr50.29 deficit SFr1.66
2003: revenue SFr47.16 expenditure SFr49.96 deficit SFr2.8
2002: revenue SFr47.41 expenditure SFr50.72 deficit SFr3.32
2001: revenue SFr48.91 expenditure SFr50.22 deficit SFr1.31
2000: revenue SFr51.68 expenditure SFr47.13 surplus SFr4.55

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In brief

The combined deficit of Switzerland's federal, cantonal and local governments was SFr239 billion at the end of 2004, which amounts to 53.5% of Switzerland's Gross Domestic Product.

Switzerland spends SFr7 billion a year – or 7% of its total tax income - on debt servicing.

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