Responding to the coronavirus is likely to have added between CHF 25 and 30 billion to Swiss federal borrowing, a sum that will only be known when the final calculation is made at the end of 2022. Paying this back is expected to take 11 to 13 years.
The federal government said that repaying this money is critical for ensuring the nation is prepared for future crises and for maintaining the financial standing of the nation, something that attracts foreign enterprise and underpins economic efficiency.
Additional pandemic borrowing stood at CHF 20.3 billion at the end of 2021. This sum is likely to rise to between CHF 25 and 30 billion by the end of this year, the government estimates.
Annual budget surpluses of around CHF 1 billion, combined with profit distributions from the Swiss National Bank (SNB), which has built up a large balance sheet trying to weaken the value of the Swiss franc, should allow, if maintained, the government to repay extraordinary pandemic borrowing over the course of 11 to 13 years. Switzerland’s federal government currently has a CHF 1.3 billion budget surplus when Covid costs are excluded.
The government hopes it can make these debt repayments without needing to cut expenditure or raise taxes.
The Covid pandemic showed the speed that public spending can grow and the importance of having sound finances in advance to allow a rapid response. Restoring federal finances to where they were before the crisis will allow the nation to face future crises and challenges such as climate change and an ageing population, according to a government press release.
Switzerland’s government debt is expected to reach CHF 312 billion by the end of 2021. By the end of 2022, government debt is expected to be equivalent to 32% of GDP.
Government press release (in French) – Take a 5 minute French test now
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