This supplement provides information that has become available since the issuance of the staff report on April 21, 2016. The thrust of the staff appraisal is unchanged.
The authorities updated their fiscal projections and policy objectives in the Stability and Growth Program released at end-April. The government agreed with the EC proposal to lower Luxembourg’s medium-term objective (MTO) to a structural fiscal deficit of 0.5 percent of GDP, but reaffirmed its commitment to keep the gross public debt below 30 percent of GDP over the medium term. The government’s fiscal deficit and public debt projections—underpinned by an upward revision of the estimated fiscal surpluses in 2014–15—are consistent with those of the staff report. The government estimates Luxembourg’s potential GDP growth at 3.2 percent, nearly the same as estimated by staff. In view of the volatile international environment, however, the authorities expect significant fluctuations of the projected GDP growth around the long-term trend, while staff envisages a gradual convergence to it.
|General government balance|
|Authorities’ April update||1.7||1.3||0.8||0.0||0.1||0.2||0.4|
|General government gross debt|
|Authorities’ April update||…||21.5||22.4||22.9||23.1||23.2||23.5|
|Real GDP growth (percent)|
|Authorities’ April update||…||4.8||2.9||4.5||4.9||3.5||2.3|