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Swiss govt sees budget deficits rising till 2013

Wed Jul 1, 2009 7:38am EDT

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* Federal government deficit seen at 2.4 bln francs 2010

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* Deficit expected to rise to 4.2 bln francs by 2013

* Finance ministry to make proposals to close gap

ZURICH, July 1 (Reuters) - The Swiss federal government expects rising budget deficits over the next four years as the recession dampens tax revenue and economic stimulus measures drive up expenditures.

The federal deficit should increase from 2.4 billion Swiss francs ($2.22 billion) in 2010 to over 4 billion francs in 2013, the Federal Finance Ministry said in a statement on Wednesday.

The 2013 deficit would be still less then 1 percent of Swiss gross domestic product.

The rise after 2010 was also due to lower revenue caused by tax reforms, which include for instance changes to value added taxes.

While the deficit in 2010 was in line with the so called debt brake -- a ceiling to government debt based on economic growth forecasts -- the structural deficits in the following years would be a breach of the rules, the ministry said.

It will therefore propose a plan to close the gaps in the fall.

The Swiss government expects the economy to shrink by 2.7 percent this year -- the worst decline since 1975 -- and by 0.4 percent next year. It launched three economic stimulus packages with a total volume of some 2.5 billion Swiss francs.

The government expects revenues to fall by some 3 percent to 58.1 billion francs in 2010 and sees expenditures rising by 2.5 percent to 60.5 billion francs.

The federal government said in February it expected a deficit of 700 million francs for 2009.

Last year, its ordinary account closed with a surplus of 7.3 billion francs, though extraordinary expenditures, especially due to the rescue of troubled bank UBS (UBSN.VX), dragged the overall account in the red. (Reporting by Sven Egenter; Editing by Toby Chopra)



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