The economic losses caused by the coronavirus pandemic will be “important and persistent,” the BCL said in its opinion on the budget presented to lawmakers on 30 November. “The losses anticipated in 2020 won’t be regained in the coming years,” it said.

The BCL estimated that public finances won’t recover until 2023 with the pandemic representing a “great shock” for public debt, exceeding that of the 2008 financial crisis. Public debt peaked at 23.7% of GDP at the time but is now close to 30%.

The central bank warned that Luxembourg’s borrowing authorisations (€3.25bn in 2020 and €3.8bn in the 2021 budget) will be insufficient to cover debt until 2024.

However, it also said the public is likely to feel little impact of the slower economic growth since gross national revenue had already been growing at a slower rate than gross domestic product, since it doesn’t include foreign capital income generated in the country.

News of a vaccine that could be available in the not-too-distant future promise relief. “The insecurity around the pandemic has decreased as vaccine availability has been announced for the coming months,” the BCL said.  

This article was originally published in French on Paperjam.lu and has been translated and edited for Delano.