Swiss federal accounts CHF2.5 billion better than expected

The Swiss budget is still in the red, but not by much. Finance Minister Karin Keller-Sutter. Keystone-SDA

A deficit of CHF80 million ($88 million) instead of the budgeted CHF2.6 billion: for the first time since the Covid pandemic, the Swiss government has almost balanced its books, according to provisional figures. This means that part of the Covid debt can be reduced for the first time.

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There are many reasons why the federal budget will almost be in the black at the end of 2024 instead of a deficit of over CHF2.6 billion. In Wednesday’s press release, the government lists lower extraordinary expenditure – such as the postponed capital subsidy to the Swiss Federal Railways – on the one hand. On the other hand, tax revenue was CHF1.2 billion higher than budgeted.

This is the first time since the Covid crisis that the federal government no longer has a deficit in the billions – despite the fact that both revenue (+5.8%) and expenditure (+4%) increased last year. According to the Federal Finance Administration (FFA), the ordinary financial balance amounts to CHF817 million.

As a deficit of around CHF500 million would have been permissible due to the economic situation, the structural surplus therefore amounts to CHF1.3 billion. This amount will be used to reduce Covid debt. If the figures for the extraordinary budget are included, the provisional debt level at the end of 2024 is CHF26.8 billion – CHF400 million less than a year earlier.

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Additional income from commodity profits

The government’s medium-term financial prospects also look better than before. The updated budget figures show an almost balanced structural financing for 2026, the government said. “This means that no additional cuts are likely to be necessary for the 2026 budget.” This is due in particular to the extensive, permanent spending cuts of recent years.

On the revenue side, a special effect will temporarily lead to higher revenue over the next three years, according to the statement. It is estimated that income tax revenue will increase by a total of around CHF1.6 billion during this period. The reason for this is that energy and commodity trading companies from canton Geneva have recorded exceptionally high profits due to the rise in commodity prices.

According to the government, this additional income should help to finance the higher growth in expenditure decided by parliament, particularly for the armed forces, as well as the compulsory contribution to Horizon Europe. At the same time, the government warns against exaggerated expectations: “This increase in profits is a one-off, temporary phenomenon and therefore not sustainable.”

In order to keep the federal finances in balance in the long term, the government believes that the relief package submitted for consultation at the end of January is necessary. Without this, deficits of around CHF2 billion a year are threatened in 2027 and 2028, it said.

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Translated from German by DeepL/ts

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