The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
This Selected Issues paper on Luxembourg reports that exemplary high growth rates and prudent fiscal policies provided the financial basis for the welfare system. Social expenditures in per capita terms, even adjusted for the large number of cross-border workers, rank highest among European Union countries, primarily driven by high replacement rates of public income support, including for unemployment benefits, the minimum guaranteed income, and pensions. Rapid social spending growth has funded substantial increases in unemployment and family benefits.