Prince Albert II of Monaco is tightening his belt after deciding to cut the working budget of the Prince’s Palace by 40% in the face of the “unprecedented economic consequences” of the coronavirus epidemic. The announcement came a few hours before the National Council was to vote on a corrective budget for the State which is heavily in debt.

“The seriousness of the situation has forced the need for strict financial management (…) for an overall reduction of State expenditure”, the Prince’s representatives underlined in a statement. “Due to this, the Sovereign Prince has decided to reduce the expenses of the Prince’s Palace by nearly 40% of its allocated budget, from €13.2 million to €8 million.”

An unprecedented deficit

On Tuesday evening, the National Council of Monaco unanimously voted to amend the 2020 budget which has a current deficit of some €478 million. This represents almost a third of the original budget.

It is due to an expected drop in State revenue of around €175 million, mainly due to the end of VAT payments, and the unprecedented expenditure of around €300 million. These exceptional costs were incurred due to the outbreak of COVID-19 as the need to finance aid to preserve the Principality’s economy, its businesses and its employees arose.

This is the first time in the Principality’s history that the government have made such drastic changes to a budget.

A robust economic and social model

While setting an example of extreme measures that can be taken by authority figures, the Prince assured in his statement that he has “full confidence in the Principality’s robust economic and social model to overcome this health crisis with unprecedented economic consequences”.

Monaco, like all countries in Europe, has been affected by COVID-19. Prince Albert II himself contracted the virus but has since recovered. To date, 94 people have been affected by the coronavirus in the Principality. The Prince’s Government has stated lockdown will end May 3rd.