The Imperial Statistics Bureau, the independent government funded bureau that releases statistics of government finances, imperial economic data etc. released a report with the help of the Ministry of Finance, or the Treasury Department, on the fiscal situation of the Empire. The report shows good signs that align with the good economic growth, but also has some warning predictions.
Luthori Daily, November 5342
Fort William, Duchy of Orange, Luthori – The Imperial Statistics Bureau has been working months on a new raport on the current fiscal climate of the government. Over the last hundred years the government has been paying off its mountain of debt and has been working on improving its economic situation and international standing. The Statistics Bureau wishes to show the results through this report. To help compile it the Ministry of Finance has provided the Imperial Statistics not only with its data, which its obligated to do by law, but also with manpower to compile the report.
The President of the Imperial Statistics Bureau, sir Harrald Malborough stated:
As the Luthorians are aware and can expect from us, we do diligent work here at the Statistics Bureau and we are pleased that at this monumental report, which compiles a lot of data, the government agreed to aid us and be open to it. I’ve spoken to the Secretary of State for the Treasury and he has also told me the report will be discussed in cabinet. As it should be of course. Our general findings is that at the moment Luthori is doing well thanks to carefull management by the government and smart investment by the private sector. There are however concerns which should be looked at. That be all for now.
Government finances
In the current budget of the government is showcases that most of its revenue comes from income taxes, with only 31% of the revenue coming from other taxes. The government barely taxes sales which prevents the government from being too reliant on the economy situation of the nation, except when unemployment falls.
The government keeps a steady surplus of 1.4 billion LPD which aids in paying off the national debt each year. Gowing over the statistics of the report from the last hundred years, the national debt has decreased with nearly 80% point. Decreasing from 574 billion LPD in 5242 to currently 284 billion LPD. Decreasing it from 142% of GDP to 62% of GDP. This has coincided with increased business confidence and years of low interest rates on the national debt, which has had good effects on the ability of the government to invest into the nation.
The report however advises the government to keep repaying the debt until it at least goes below 60% of GDP to keep government finances healthy, interest rates low and business confidence high. This also makes it possible for the government to react to global economic factors when needed without endangering the government’s ability to repay its debts.
The economy
From all data in the report its shows that the economy is doing extremely well. The economy grew with 4% last year and is reported to grow with 5,5% this year, which will cool off a bit next year to 3,9% growth. The Statistics Bureau states that the economic growth is caused thanks to new business opportunities due to government investments in infrastructure and the opening of new opportunities and decreasing barriers thanks to new trade agreements and economic pacts with various other nations.
Especially the expansion of Luthorian companies in other countries and the business and work this generates has been cited in the report to have cause the economic growth in Luthori. The report however states that the explosive growth has also caused international concern, which could be bad for business.
Much of Luthori’s economy is in the hands of the private sector, with little to no government control, except for regulations and minority shares in some companies. The only big exception is Luthori Oil and the Luthorian Train Company, which are private entities owned for 100% by the Imperial Government. According to official statistics about 77% of the economy is based on the private sector & investments. Only 23% of the economy comes from the public sector financed by the government. This means Luthori’s economy is heavily reliant on the success of the market. With growing international interests the Luthori economy becomes ever more tied to the global economic situation. Currently the markets are doing well, but a global recession could hurt Luthori hard.
Low Interest rates
The most shocking result from the report was the low interest rates that the national bank maintains for new loans. The Imperial Bank has been printing money to make it easier for companies to invest money through credit, which has helped the economy grow exponentially. Especially the growth of various Luthorian banks to oversea countries. However the report states that with this high of economic growth the National Bank has been making irresponsible choices at keeping the interest rates low. Though inflation isn’t high, it has increased from 1,5% to 2,7% over the last year. The report also shows that due to the low interest rates (of 0,5%) Luthorians haven’t been saving up money and that the privately held debt by businesses has sharply increased. The report advises both the government and the Bank to take action to prevent inflation and a too extreme high conjecture of the economy. Stating that this could be done by increasing the interest rates.
Response from the Secretary of State of the Treasury
In a response to the report the Secretary of State of the Treasury, Francis Kingsington has stated that he is happy with the report and that it showcases that Luthori is growing and succeeding but that it isn’t without its challenges. The Secretary stated that he will discuss the report with the government and see what can be done with it for the good of the economy.
It is important that we recognise that this government is making Luthori succeed. Not all risks that this report mention is really the governments job to tackle, our reliance on the private sector for instance is a choice. We believe that through government regulation we can do more than through possessing it and risking a lot of public funds. However te risk of inflation and the low interest rates, not to mention the increase in private debt is a concern which the government will need to tackle, but I need first discuss this with my cabinet colleagues, especially the Prime-Minister.
The President handing over the report to Permanent Secretary of Treasury Department