The central government balance is currently in surplus but is expected to be in deficit for the year 2022 as some payments won’t be processed until April 2023.  These amount to €1.8bn.

Central government revenue reached €23.5bn at the end of 2022, up 7.4% in one year. Expenditure up 6.% to reach  €22.5bn. This means a final surplus balance of €1.010bn. When the 2022 budget was tabled in October 2021, a deficit of €1.2bn was expected.

With the outstanding expenses of €1.8bn deducted, the deficit remains around €500m below this estimate, Backes (DP) told lawmakers in a committee meeting in parliament.

-17.1% of revenue at the pump

In detail, €413m was spent on aid to households and businesses. Expenses related to operating costs and the salaries of state employees increased by 9% and 9.2%, respectively, due to inflation. Public investments amounted to €2.54bn.

On the revenue side, the Direct Tax Administration (DTA) raised income 8% to €11.1bn. The evolution is explained by the withholding tax on salaries and wages (RTS), which raised an additional €546m thanks to the good performance of the labour market and the successive tranches of the indexation of salaries.

The Customs and Excise Administration (ADA) collected €1.9bn (+0.8%). Even though the tax revenue on road diesel decreased by 17.1% to €572m.

The Land Registry and VAT Administration (AED) ended the year with €7.3bn (+9%), mainly thanks to VAT, which rose with inflation.

Tax relief in the form of tax credits

Public debt amounts to €18.9bn, or 24% of GDP, data presented by Backes showed, slightly lower than the estimate of 24.6% announced when the 2023 budget was presented. Under a government target, public debt should not exceed 30%.

“Given the geopolitical outlook and especially the economic slowdown expected in 2023, I continue to advocate a responsible and forward-looking fiscal policy that does not jeopardise the medium-term sustainability of our public finances,” the minister said.

“It is in this spirit that I will continue to monitor closely the evolution of public finances in order to determine the margin available for targeted tax relief,” she said. These measures should be in the form of tax credits if the budgetary situation improves as expected. “I want this margin to be fully used to strengthen the purchasing power of households in these difficult times, and to do so retroactively from the beginning of 2023.”

A new analysis should be made in preparation for the stability and growth programme, which is due to be presented at the end of April.

This story was first published in French on . It has been translated and edited for Delano.