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In: IMF Staff Country Reports
KEY ISSUESContext. With a strong policy framework, Luxembourg has weathered the crisis well, andthe economy is rebounding. The fiscal position remains sound, and the large financial sector has been resilient. But trend growth has slowed substantially. The financial sector will have to adjust to a changing external landscape, public finances will come under strain from losses in e-VAT revenue and strong expenditure growth, and Luxembourg's cost competitiveness is being eroded. A new government took office in December 2013.Fiscal policy. A moderate but sustained fiscal consolidation is essential
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