In 2009, government debt skyrocketed. It now amounts to 5.6 billion euros, or 14.9% of GDP, while in 2007 it was only 2.5 billion. For 2010, forecasts are equally pessimistic. The fiscal balance that the Finance Minister, Luc Frieden forecasts won't be in order until  2014.

Cut spending, review social benefits, possibility of tax increases: These are just some of the plans  for the Luxembourg budget in the next four years. The goal: save up to 1.6 billion by 2014,  that's 400 million per year.

The Finance Minister, Luc Frieden wishes to place all the cards on the table with an all-round program of stability and growth, as the financial crisis has sealed public finances.

The government is in deficit of around 400 million euros. Public debt has also exploded from  2.5 billion euros in 2007 to 5.6 billion in 2009.

Are we heading towards tax increases?

If no new reform is adopted and things continue on their current path, the state would be forced to take a loan of 18 billion euros or 37% of its GDP.  Inconceivable for Luc Frieden.

Structural measures are therefore needed. One of the area being considered which could create a lot of controversy is a possible increase in taxes and VAT.

For the rest, Luc Frieden remains cautious and prefers to wait for tripartie meetings and discuss with various social partners to draw up a list of reforms.