For the first time since 2020, the Swiss Federal Council has announced a balanced budget for the next year. However, the government did concede that large and costly projects like increased military spending may see the country dip into the red in the following years.

Switzerland to keep a balanced budget within deficit limits

In the latest parliamentary session, the Federal Council announced the government's official budget for 2023. The budget itself has a total deficit of 900 million francs a year - well below the 1,2 billion franc limit set by parliament. 

The council expects to pay for the extra cost with higher revenues from Swiss taxes. In all, the Federal Finance Administration forecast a surplus of 0,3 billion francs in the next year, as COVID expenditure declines and the country benefits from the post-pandemic economic recovery.

The balance also includes 1,7 billion francs in aid to help accommodate the estimated 100.000 to 300.000 Ukrainian refugees set to arrive in Switzerland due to the Russian invasion. Alongside the increased spending, the federal government expects revenues of 1,6 billion francs from the Swiss National Bank and an extra 200 million francs from the privatisation of RUAG - a publicly owned aerospace company.

Swiss government to ramp up spending in the next four years

However, the council warned that as things stand, the federal government will increase spending dramatically over the next four years, mainly due to increased funding for the army, climate policy and research funding. Referendums like the premium initiative and the abolition of imputed rental value tax will also leave a hole in federal coffers if they pass in the next year.

In all, federal tax authorities say the government needs to find an extra 1,1 to 1,3 billion francs a year in order to stay in the green in the next four years. The Federal Council is expected to announce adjustments to the budget to accommodate for the shortfall later this year.