Council Opinion of 22 January 2002 on the updated stability programme of Luxembourg, 2000-2004
Date: 2002-01-22
Institutions: Council of the European Union
Subjects: Economic and Monetary Union, Luxembourg, economic policy, economic stabilisation, gross domestic product

6.2.2002

EN

Official Journal of the European Communities

C 33/1

I

(Information)

COUNCIL

COUNCIL OPINION

of 22 January 2002

on the updated stability programme of Luxembourg, 2000-2004

(2002/C 33/01)

in the 2000 update, resulting from buoyant tax revenues which
more than compensated significant increases in expenditure;
decelerating activity and the effects of
the tax reform are
expected to lower the government surplus in 2001; overall,
the projected budgetary surplus over
the
programme is somewhat higher than in the 2000 update,
and improved growth
conditions
due
prospects from 2003 onwards. The public finance projections
presented in the 2001 update to the stability programme of
Luxembourg are thus in compliance with the requirements of
the stability and growth pact as the government’s budgetary
position remains close to balance or in surplus all along the
period covered.

the period of

to better

initial

that

expenditures of

central
current
The Council notes
government continued to grow rapidly in 2001 and are
expected to accelerate to 10,5 % in 2002,
faster than the
total budget expenditure; although the situation of public
finance in Lucembourg is extremely sound,
the rigidity of
current expenditure acknowledged by the update itself might
become a factor of risk should growth slow significantly in the
medium term.

continued

commends

of
the
The Council
government expenditure towards investment spending aimed
at improving infrastructure, the technological level of activities
and human capital;
the tax
burden through the implementation of tax reform while main-
taining sound budgetary position.

it welcomes the reduction of

orientation

The Council notes that Luxembourg is in a good position to
meet
the budgetary consequences of ageing population;
however, readiness to adapt policy in case of adverse devel-
opments is required. The Council notes the very low level of
government debt ratio in Luxembourg, resulting from healthy
public finances and budgetary surpluses over a number of
years.

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 22 January 2002 the Council examined the updated
stability programme of Luxembourg, which covers the period
2001-2004.

The Council notes that sound management of public finances
continues to be the guiding principle of the 2001 update; the
budgetary strategy of
the updated programme is based on
lending position of general government, a
continued net
balanced budgetary position of central government and rise
in ordinary expenditures lower than the overall budget.

In 2000, real GDP growth was particularly strong, at 8,5 %,
driven by dynamic domestic demand and buoyant exports; in
2001, despite the general economic slowdown entailed by
external factors, economic growth in Luxembourg remained
relatively robust at around 4 %; real GDP growth is projected
to accelerate in 2002 and remain strong in the following two
years covered by the programme.

The Council notes that
the general governmental surplus
reached 6,2 % of GDP in 2000, clearly above that projected

(1) OJ L 209, 2.8.1997.