## Luxembourg: 2025 Article IV Consultation-Press Release; and Staff Report

_IMF Staff Country Reports, June 5, 2025_

## Source details

**Canonical URL:** [Luxembourg: 2025 Article IV Consultation-Press Release; and Staff Report](https://www.imf.org/en/publications/cr/issues/2025/06/04/luxembourg-2025-article-iv-consultation-press-release-and-staff-report-567449)

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## Bibliographic details
- Published: June 5, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229011754.002

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### Key findings and outlook
- Luxembourg’s fundamentals remain strong.
- An economic recovery is projected to slowly gain pace amidst external headwinds.
- Downside risks prevail in the short term.
- The fiscal balance improved to a surplus of 1 percent of gross domestic product in 2024, boosted by one-off revenues.
- The financial sector is resilient, with well-capitalized and liquid banks.
- Vulnerabilities that should continue to be closely monitored include the housing market and other pockets of vulnerability.

### Fiscal position and risks
- Fiscal balance: surplus of 1 percent of gross domestic product in 2024, driven by one-off revenues.
- Given structurally high revenue volatility, prudent fiscal policy should be based on a more efficient use of fiscal space.

### Financial sector and stability
- The financial sector is described as resilient.
- Banks are well-capitalized and liquid.
- While risks are manageable, monitoring of the housing market and other vulnerability pockets is recommended.

### Structural challenges and labor market
- Structural reforms are needed to boost private sector-led growth and sustain living standards.
- Wage indexation has become a key constraint on competitiveness.
- More labor market flexibility is called for to alleviate rigidity.

### Policy recommendations and priorities
- Base prudent fiscal policy on more efficient use of fiscal space due to high revenue volatility.
- Boost productivity and contain the cost of living by:
  - Streamlining the regulatory and administrative burden.
  - Removing barriers to entry in some sectors.
  - Addressing housing and infrastructure supply bottlenecks.
- Increase labor market flexibility to address wage indexation constraints on competitiveness.

*Luxembourg: 2025 Article IV Consultation-Press Release; and Staff Report — June 5, 2025*

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_Source: https://www.imf.org/en/publications/cr/issues/2025/06/04/luxembourg-2025-article-iv-consultation-press-release-and-staff-report-567449_