February 10, 2009 / 1:30 PM / 11 years ago

UBS rescue drags Swiss government balance in the red

ZURICH (Reuters) - The Swiss federal government ran a 3.6 billion Swiss franc ($3.10 billion) deficit last year, as a 6 billion franc capital injection for the country’s largest bank, UBS, dragged the government’s balance into the red.

The federal government ran a 7.3 billion franc surplus in its ordinary account as a strong economy for much of last year boosted tax revenue, well above the originally budgeted surplus of 1.1 billion francs, the finance ministry said on Tuesday.

But the government had some 11 billion francs of extraordinary expenditure, the ministry said.

Roughly half the amount was spent on a new infrastructure fund, the government’s pension fund and adjustments to the financial relations with the cantons.

“The measures to support UBS’s capital base led to additional expenditure of 5.9 billion Swiss francs,” the ministry said.

The value booked was slightly below the nominal value of $6 billion francs of the convertible bond the government signed due to adjustments for accounting reasons, the ministry said.

Overall federal government debt only rose by 0.8 billion Swiss francs to 121.8 billion francs, the ministry said, as most of the deficit was covered by using short-term liquidity.

Reporting by Sven Egenter; editing by David Stamp

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