Council Opinion of 12 March 2001 on the updated stability programme of Luxembourg, 1999-2003
Date: 2001-03-12
Institutions: Council of the European Union
Subjects: Economic and Monetary Union, Luxembourg, economic policy, economic stabilisation, gross domestic product

10.4.2001

EN

Official Journal of the European Communities

C 109/1

I

(Information)

COUNCIL

COUNCIL OPINION

of 12 March 2001

on the updated stability programme of Luxembourg, 1999-2003

(2001/C 109/01)

reduction in the

general government surplus is projected to come down to
about 2,5 % of GDP in the years 2001-2003. While the very
healthy public finance situation in Luxembourg clearly allows a
significant
the Council,
considering the fiscal
impulse given by the tax reform to a
fast growing economy where wage increases are already accel-
erating, encourages the government to be ready to tighten the
stance of
inflationary risks become more
evident.

fiscal policy if

tax burden,

The Council notes that government expenditures are still
increasing at a rapid pace although their ratio to GDP is
projected to decline by two percentage points during the
period to 2003; therefore, the Council recommends to the
Luxembourg government to monitor closely and be ready to
limit expenditure increases which might become a source of
vulnerability for the public finances should real GDP growth
falter.

commends

investment.

the Council

the measures

economic
It

efficiency, particularly
notes

the policies aimed at
However,
increased
strengthening
public
at
strengthening the reserve funds in the social security sector,
particularly for pension provision. More information on the
implications of the cost of the ageing population should be
provided in the next update. The Council also notes the
recent
the
government. The Council notes that, although the government
is particularly low in Luxembourg, more information
debt
concerning developments in this area should also be provided.

ILO study on pensions

commissioned

aimed

by

The Council considers that the underlying financial position of
corresponding to the projected
the general government
surpluses over
to 2003
provides an adequate safety margin against breaching the 3 %
of GDP deficit threshold, thus fully complying with the stability
and growth pact requirements.

the programme

the period of

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:

On 12 March 2001 the Council examined the 2000 update of
the stability programme of Luxembourg which covers the
period 2000-2003.

to sound
The Council notes that continuing commitment
economic policies,
in particular budgetary policies, has
entailed a remarkable economic performance in Luxembourg:
real GDP growth reached 7,5 % in 1999 and an estimated 8,3 %
in 2000.

the budgetary
The Council notes with satisfaction that
objectives set in the 1999 update have been exceeded, as the
general government surplus reached 4,4 % of GDP in 1999 and
likely more than 3 % of GDP in 2000. The Council considers
that the updated stability programme is consistent with the
broad economic policy guidelines.

The Council notes that
the updated programme takes into
account the effects of the ambitious reduction in income tax
planned for 2001 and 2002; as a result of these tax cuts, the

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