Switzerland's President and Finance Minister Karin Keller-Sutter predicted annual budget deficits of approximately 3 billion Swiss Francs ($3.31 billion) in the coming years, driven by increased military expenditures and pension obligations, she revealed in a recent media interview.

While Switzerland traditionally maintained balanced budgets, deficits grew starting in 2020 due to additional expenses linked to the COVID-19 pandemic. A government website indicated a projected deficit of 2.6 billion Swiss Francs for 2024.

“In total, there is around 2 billion Francs that were not budgeted for in the 2026 budget,” Keller-Sutter commented during in an interview published in SonntagsZeitung and Tages-Anzeiger.

“We do have additional income from profit taxes, but they can't compensate for everything,” she added, in reference to elevated profits in 2022 and 2023 by Geneva-based commodity trading houses, Reuters reports.

In a referendum last year, Swiss voters approved increased pension payments for older citizens, despite government warnings about the financial strain. 

Furthermore, Switzerland, a neutral country, is bolstering its defences in response to the Ukraine war, purchasing new fighter jets and missile systems, and constructing data centres to enhance protection against cyber threats.

Keller-Sutter, who assumed the rotating one-year presidency earlier this month, mentioned in the same interview that the government is preparing consultation documents for new banking regulations following last month's release of an inquiry into the collapse of Credit Suisse.

She stated that the regulations could grant regulators new powers to impose fines on both banks and individuals, along with the potential for clawbacks on banker bonuses.

When asked if the new measures would prevent future government bailouts, Keller-Sutter indicated that there was no guarantee. “We in Switzerland...have to do our homework (on banking regulation). But one shouldn't claim 100% security,” she added.