IMF Staff Country Reports

Luxembourg: Selected Issues

June 7, 2024

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Format: Chicago

International Monetary Fund. European Dept. "Luxembourg: Selected Issues", IMF Staff Country Reports 2024, 156 (2024), accessed November 12, 2024, https://doi.org/10.5089/9798400277931.002

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Summary

This Selected Issues paper explores implications for safeguarding fiscal space in Luxembourg. The analysis discusses the main drivers of revenues and expenditures in recent years. Against the background of rising ageing costs, the analysis discusses the fiscal outlook, accounting for the announced government plans, as well as fiscal risks. Additionally, it offers options for helping to safeguard ample fiscal space, in view of the spending pressures and risks. In order to preserve its ample fiscal buffers, which will support the government’s commitment of keeping Luxembourg’s AAA rating, a more prudent fiscal policy would be advisable. Recent revenue increases should not be taken as given, and additional tax reforms should be done in a budget-neutral manner. The growth of compensation of employees should be limited, social programs better targeted, and their efficiency increased. Early pension reform would also help limit spending pressures. Finally, a national framework could help anchor fiscal policy and maintain a credible commitment to prudent fiscal policies.

Subject: Corporate income tax, Expenditure, International organization, Monetary policy, Personal income tax, Revenue administration, Social protection spending, Taxes

Keywords: Ample fiscal space, CIT revenue, Copyright page, Corporate income tax, GDP share, Global, Personal income tax, Personal income taxation, Property taxation reform, Social protection spending, Spending pressure

Publication Details

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