Council Opinion of 13 March 2000 on the updated stability programme of Luxembourg, 1999 to 2003
Date: 2000-03-13
Institutions: Council of the European Union
Subjects: Luxembourg, economic policy, economic stabilisation, gross domestic product, public finance

C 111/2

EN

Official Journal of the European Communities

18.4.2000

COUNCIL OPINION

of 13 March 2000

on the updated stability programme of Luxembourg, 1999 to 2003

(2000/C 111/02)

The Council notes that
the updated programme, based on
better budgetary outcomes in the last wo years and improved
is projecting more ambitious budgetary
economic prospects,
outcomes than the initial programme; the general government
surplus is projected to rise to 2,5 % of GDP in 2000 and to
3,1 % in 2003. The Council considers that
the underlying
financial position of
the general government corresponding
to the projected surpluses over the period of the programme
to 2003 provides an adequate safety margin against breaching
the 3 % of GDP deficit threshold, under normal circumstances.

The Council acknowledges that policies aimed at enhancing the
capacity of a small open economy such as Luxembourg to face
unfavourable external influences are appropriate; it commends
in this regard the measures aimed at strengthening the reserve
funds; it also commends building sufficient reserves in the area
it
of pension provision and social
encourages
to continue combining such
prudential measures with policies and reforms aimed at
enhancing the potential of
it welcomes the
increased resources allocated to government investment.

security in general;

the government

the economy;

increase

to limit

included in the initial
The Council notes the commitment,
stability programme,
in central
the
government expenditure. The Council acknowledges, that the
public finance projections of the updated programme show a
decline in total expenditure to GDP ratio by almost
two
percentage points at central government level, between 2000
and 2003, a development which would allow the recuction in
the revenue to GDP ratio in the same period; it encourages the
Luxembourg government to pursue these expenditure targets.

The Council encourages the government to be ready to tighten
the stance of fiscal policy in the event of risks of inflationary
pressure, notably in view of the current and prospective high
rates of economic growth.

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July
1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic
policies (1), and in particular Article 5(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

two years and the budgetary targets set

On 13 March 2000 the Council examined the 1999 update of
the stability programme of Luxembourg which covers the
period 1999 to 2003. The Council notes with satisfaction
that the situation of public finances improved further in the
last
in the initial
stability proramme of Luxemburg have been exceeded. The
general government surplus for 1999 in now estimated at
2,3 % of GDP compared to 1,2 % initially projected, while
the general government gross debt was reduced further to
about 4,3 % of GDP. The Council considers that the updated
stability programme is consistent with the broad economic
policy guidelines.

to sound
The Council notes that continuing commitment
in particular budgetary policies, enabled
economic policies,
Luxembourg to achieve high GDP growth rates and created
the conditions for improved growth prospects in the years
ahead; real GDP growth is estimated to have reached 4,9 %
in 1999, while forecasts for 2000 and 2001 point to growth
rates clearly above 5 %.

(1) OJ L 209, 2.8.1997, p. 1.