Principality of Liechtenstein: Selected Issues

This Selected Issues paper provides an initial assessment of long-term spending pressures in Liechtenstein. Liechtenstein faces rising yet manageable fiscal pressures from demographic change, climate transition, and evolving security needs. IMF staff estimate these pressures could reach about 3.5 percent of gross domestic product annually by 2050. The country’s strong fiscal position—characterized by low public debt, substantial net assets, and consistent budget surpluses—provides a solid foundation to address these challenges. However, more detailed assessment and comprehensive fiscal planning across short-, medium-, and long-term horizons are required. While spending pressures will materialize gradually, early and sustained policy action is essential, particularly in climate-related areas. Key drivers include population aging and pension obligations, climate mitigation and adaptation, and increased security demands. Systematically costing and integrating these pressures into the fiscal framework, supported by independent evaluation and regular sustainability assessments, would enhance transparency, credibility, and efficient resource allocation.