Selected Issues Papers

Liechtenstein: The Fiscal Sector Framework

By Rodgers B Chawani, Tara Iyer

April 28, 2025

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Format: Chicago

Rodgers B Chawani, and Tara Iyer. "Liechtenstein: The Fiscal Sector Framework", Selected Issues Papers 2025, 045 (2025), accessed May 17, 2025, https://doi.org/10.5089/9798229009720.018

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Summary

This paper analyzes Liechtenstein's fiscal framework, highlighting its successful consolidation following the global financial crisis. The study examines the budget balance rule that anchors fiscal policy, benchmarking key fiscal indicators against European peers. Findings reveal Liechtenstein effectively implemented frontloaded fiscal consolidation through revenue and expenditure measures, improving the fiscal balance by 4.1 percent of GDP during 2014-18. Despite maintaining low tax rates, Liechtenstein operates with a lean government structure, evidenced by low public employment levels and wage bills. The analysis concludes that increased capital investment could boost productivity, which has stagnated over the past two decades despite being higher than Switzerland's.

Subject: Expenditure, Income, Labor, National accounts, Pensions, Revenue administration, Taxes, Value-added tax

Keywords: Balance, Budget, Budget balance rule, C. budget rule principle, Consolidation, Economic growth, Europe, Expenditure, Financial Crisis, Fiscal, Fiscal buffers, Fiscal rule, Framework, Global, Income, Infrastructure, Investment, Liechtenstein, OECD pillar II tax reform, Pensions, Productivity, Productivity in Liechtenstein, Social protection, Taxation, Value-added tax, Washington D.C. International Monetary Fund

Publication Details

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