In its annual exercise, the Luxembourg Court of Auditors has published its report on the state’s general account, a document that shows actual expenditure and revenue. The report begins with a reminder to put the 2022 budget exercise into context: the budget was implemented in a macro-economic context burdened by covid, Russia’s war in Ukraine, inflation and the energy crisis.

The first salient figure: the report indicates a deficit of €1.2bn, a number that, although significant, is lower than the €1.49bn deficit initially forecast in the budget. The court mentions that, in response to rising prices from September 2021 onwards, the government adopted three packages of measures to support households and businesses and to “contain the inflationary spiral.” These are the Energiedësch, Solidaritéitspak 1.0 and Solidaritéitspak 2.0, measures that combined for a budgetary impact of around €2,541bn on the 2022 budget.

It is also clear from the report that the government had been optimistic. For example, it had assumed GDP growth of 3.5%, whereas actual growth in 2022 was only 1.4%. Similarly, for inflation, the budget was based on an inflation (NICP) of 1.7%, whereas in reality it reached 6.3%.

There was also surplus in current revenue, the report found, which explains why the deficit is lower than forecast in the initial budget. While the budget foresaw total revenues of around €21.88bn, the real number turned out to be €23.40bn. Expenditure was also higher than forecast in the budget, however, by 5.09%.

“The improvement in the overall balance compared with the budget of some €376m stems mainly from current revenue, including in particular customs duties, registration fees and direct taxes, which were significantly higher than initially forecast, thus also overcompensating for the higher expenditure,” former finance minister (DP) told the Court of Auditors.

See the report below (French only).

This article in Paperjam. It has been translated and edited for Delano.