Like many governments across the world, Switzerland’s federal government is spending more than it collects. Extraordinary spending on Covid and refugees has pushed Switzerland’s finances into the red, a situation Karin Keller-Sutter, the current finance minister, hopes to eliminate by 2024.
During its meeting on 25 January 2023, the Federal Council made preliminary decisions to ensure a balanced budget in 2024 and beyond. It hatched a plan to boost revenue and reduce spending in order to comply with the country’s debt brake requirements, with a focus on spending cuts.
According to the Federal Council, cuts will be applied in all areas, with details to be agreed by February and March 2023.
The key elements outlined so far are removing CHF 600 million for the Horizon programme from the budget, shaving CHF 300 million from the military budget and taxing the import of electric cars at the same rate as other vehicles, a boost of CHF 200 million. In addition, all federal government departments will be required to find savings of 1% to 2%. This will save a further CHF 200 to 500 million, according to the government.
An accounting trick could then be applied to help balance the books in 2024. CHF 500 million, a portion of the money budgeted to cover the cost of refugees, could be reclassified as extraordinary and moved out of the ordinary budget. The country would still need to borrow to fund the spending but it would not form part of the regular budget.
To maintain a balanced budget beyond 2025 will require more work, said the Federal Council. Costly projects currently being examined by parliament could put Switzerland’s finances at risk again. One to reduce health insurance premiums, one to increase the number of childcare spaces and another to reduce CO2 emissions could all push federal finances into negative territory, it said.
The Federal Council, Switzerland’s executive, has urged parliament not to lose sight of costs and the national budget.
Government press release (in French) – Take a 5 minute French test now
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Mark W. says
We should consider introducing a carbon tax to pay for CO2 emissions reduction and help to reduce the general budget deficit.