Solothurn (Canton of)

This report does not constitute a rating action. Overview Credit context and assumptions Base-case expectations --The Swiss economy remains resilient against challenging economic conditions. --Solothurn?s tax revenue basis should remain robust and mitigate the impact of the tax reform. --We believe the Canton of Solothurn?s financial management will adhere to tight fiscal policies, and a very good liquidity position will facilitate debt reduction. --A shortfall in SNB dividends coupled with additional costs stemming from high inflation will pressure cantons? expenditure side in 2023. --After a record loss in 2022, we currently assume that Swiss National Bank (SNB) will not pay dividends in 2023-2024. --After strong results in 2022, Solothurn?s budgetary performance will hence soften in 2023. Difficulties will spring from

...The Canton of Solothurn will face budgetary challenges in 2023. Difficulties will spring from no profit distribution from SNB or increased expenditure due to higher inflation, for example. Last year, however, the canton posted very strong financial results even despite macroeconomic hurdles. Nonetheless, these conditions will persist, likely narrowing the operating balance and leaving only marginal surpluses after capital accounts over the 2023-2026 forecast horizon. We expect the canton's financial management to adhere to its tight fiscal policy and adopt savings measures, if required, to mitigate the budgetary pressures. Furthermore, we assume the canton's tax revenue basis will remain resilient and cushion the impact of the recent tax reform which was approved in a public referendum last year. We think Solothurn remains committed to reducing its leverage and repaying debt when possible. The canton's liquidity position is still exceptional, with liquid assets falling due before the upcoming...

Full Report