Front Matter

Front Matter Page

© 2005 International Monetary Fund

June 2005

IMF Country Report No. 05/188

Switzerland: Selected Issues

This Selected Issues paper for Switzerland was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on May 13, 2005. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Switzerland or the Executive Board of the IMF.

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Front Matter Page



Selected Issues

Prepared by Anastassios Gagales, Benedikt Braumann and Magdalena Polan (all EUR)

Approved by the European Department

May 13, 2005


  • I. Intertemporal Policy Consistency in Switzerland: Is the Current Social Insurance System Sustainable?

    • A. Introduction and Summary

    • B. The Demographic Outlook for Switzerland in International Context

    • C. Impact of Demographic Shift on Growth: The Best Years are Behind

      • Baseline Scenario

      • How Robust is the Baseline Growth Scenario?

    • D. Impact of Demographic Shift on Public Finances: Pressures Likely to Intensify

      • Current Fiscal Situation

      • Long-Term Fiscal Outlook

      • How Robust is the Baseline Fiscal Scenario?

    • E. Some Policy Options

    • F. Concluding Remarks

  • Appendices

  • I. The Framework for Long-Term Growth Projections

  • II. Fiscal Sustainability: Some Theoretical Considerations

  • III. A Framework for Old Age and Disability Pension Projections

  • IV. A Framework for Health Care Projections

  • V. Data Sources

  • References

  • Figures

  • I-1. Demographic Developments, 1960–2002

  • I-2. Population Projections, 2000–90

  • I-3. Population Scenarios

  • I-4. Debt Dynamics, 2006–60

  • I-5. Adjustment Scenario, 2005–60

  • I-6. Impact of Aging on Pension Expenditure

  • I-7. Impact of Aging on Health Expenditure

  • Tables

  • I-1. Long-Term Growth and its Determinants

  • I-2. Alternative Growth Scenarios

  • I-3. Fiscal Accounts, 1990–2005

  • II. The Need for Health Care Reform

    • A. Health Care Spending in Switzerland

    • B. High Prices and Their Causes

    • C. Financing of Health Care

    • D. Fiscal Burdens

    • E. Conclusions

    • Data Sources

    • References

  • III. The Political Economy of Adjustment and Reform in Switzerland

    • A. Political Institutions

    • B. Political Variables

    • C. Fiscal Adjustment

    • D. Structural Reforms

    • E. Conclusion

    • Appendix: Refererenda with Economic Content 1970–2004

    • References

  • Figures

  • III-1. The Number of Referenda has Mushroomed

  • III-2. The Government’s Large Majority Dipped in the 1990s

  • III-3. Classification of Political Parties

  • III-4. The Average Political Position has been Stable

  • III-5. The Political Distribution is Multimodal

  • III-6. Political Polarization has Increased

  • III-7. More Tensions in the Government in Recent Years

  • III-8. Upswings Tend to Favor Political Polarization

  • III-9. Swiss Fiscal Policy has been Highly Procyclical

  • III-10. Polarization Drives Expenditure Higher

  • III-11. A long Recession in the Mid–1990s Facilitated Reforms

  • Tables

  • III-1. Granger Causality between Output Gap and Polarization

  • III-2. Political Economy of Fiscal Adjustment

  • III-3. Political Economy of Structural Reform

  • IV. Characteristics of the Swiss Financial System in International Comparison

  • Tables

  • IV-1. Structure and Size of the Financial System

  • IV-2. Financial Development in Major Financial Institutions, 2002–04

  • IV-3. Core Set of Financial Soundness Indicators

  • IV-4. Encouraged Set of Financial Soundness Indicators

Switzerland: Selected Issues
Author: International Monetary Fund