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Finance minister Pierre Gramegna says that favourable public finances at the start of the coronavirus crisis allowed the government to react quickly.Photo: Library picture from 2018 by Anthony Dehez 

Public revenues fell by 12.1% compared to June 2019, an absolute decrease of €1.2 billion, the ministry of finance revealed in a statement issued on Friday morning. Meanwhile, expenditure rose by 21.9% compared, equivalent to €2.05 billion in absolute terms. The figures leave public debt at a not inconsequential 25.4% of GDP, though that is still in line with the 30% threshold set by the government and remains well below the 60% limit set at the European level.

The biggest hit to revenue came from losses recorded by the three tax administrations amounting to €957.6 million, which the ministry says is the result of a general weakening of the economy and tax measures taken to provide busienesses with liquidity needs during the covid-19 crisis.

The crisis also accounts for much of the increased expenditure, including costs for crisis management, and in particular for medical equipment and treatment centres, that amounted to €93 million.

Finance minister Pierre Gramegna (DP) says the government was aware from the outset that the health and economic crisis linked to the spread of covid-19 would be an unprecedented challenge for the grand duchy. “Thanks to the flexibility granted by the European authorities but also to the favourable starting position of our public finances, the government was able to react quickly to the short-term emergencies that manifested themselves at so many levels. In addition, it was able to implement stimulus measures to mitigate the risk of unemployment and to support businesses through liquidity measures and financial aid. This has inevitably had a significant impact on public finances, both on the central government balance and on public debt, but at the same time strengthens the economy’s ability to recover.”