Switzerland has recorded its first budget deficit in a decade, following lower than expected tax revenues.
The government announced a CHF124 million ($134 million) deficit for 2014, after initially forecasting a surplus of CHF121 million.
Finance Minister Eveline Widmer-Schlumpf said the shortfall in the federal accounts was notably as a result of a lower income tax take from businesses and citizens.
Debts were reduced by CHF2.8 billion to stand at CHF108.8 billion at the end of 2014.
Widmer-Schlumpf said spending cuts were inevitable for the next few years, also given the uncertainty over the impact of the strong Swiss franc for the economy.
In a first step, the cabinet agreed to reduce spending and to freeze expenses for personnel and outside consultancy firms.
“We face great economic challenges. Sound public finances are an important condition for Switzerland to remain competitive and to attract investors,” the minister told a news conference.
The government has decided on a number of measures to help boost perspectives for the economic development of the country. It will review the situation by next June and decide on further steps.
Urs Geiser, swissinfo.ch