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Federal finances buck negative trend

A visibly satisfied Hans-Rudolf Merz (left) with cabinet colleague Moritz Leuenberger at Wednesday's news conference

(Keystone)

The Swiss federal finances look set to go into the black for the first time in seven years, the government announced on Wednesday.

It approved a budget for 2007 which foresees a surplus of SFr918 million ($747 million) under a new model of accounting.

The cabinet also adopted its financial plan for 2008-2010 which sees annual surpluses of SFr700 million-SFr1.9 billion.

Swiss finance minister Hans-Rudolf Merz told a news conference in Bern that both the budget and the financial plan clearly satisfied the requirements of the debt containment rule, which aims to keep federal finances under control.

"We have reached an important stage on the right track," he said, adding that the government's plan to reorganise the federal finances was bearing fruit.

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

Marked improvement

Merz said this year's result should also show black figures – a marked improvement on the planned deficit of SFr697 million.

The budget for 2007 is counting on revenues of about SFr56 billion and expenditure of SFr55 billion. Revenues should go up by 7.3 per cent over those of the current year, expenditure by 4.3 per cent.

Revenue estimates are based on the latest economic forecast of the State Secretariat for Economic Affairs, which at the end of June was forecasting growth of 1.5 per cent in real terms for Switzerland in 2007.

The ministry said that despite the restrictions on spending to keep the figures in the black, the government had decided to make one exception in education and research.

For this, "clearly a priority" area, the government is willing to grant a growth in spending of 4.5 per cent annually until 2010.

In a reaction to the news, there was little joy within the political parties. The centre-left Social Democratic Party and the centre-right Christian Democratic Party criticised the low increases for education.

For their part, the centre-right Radical Party and the rightwing Swiss People's Party warned Merz against any slackening of the financial reins.

swissinfo with agencies

In brief

In a report on Switzerland in March, the International Monetary Fund (IMF) said the country's debt brake mechanism had proven valuable in keeping the federal finances under control.

But it said that it was becoming exposed to structural expenditure pressures.

The report said the budgeted expenditure of the confederation in 2006 was consistent with the debt brake and the authorities were on track to eliminate the federal government structural deficit by 2007.

The IMF warned that to preserve the credibility of the debt brake, structural fiscal reforms would be needed, a move which should not be delayed.

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