The Swiss federal government expects a financing deficit of 4.1 billion Swiss francs ($4.15 billion) this year, it said on Wednesday, attributing this to high extraordinary expenditure, mainly to deal with the COVID-19 pandemic.

The government had projected a 2022 budget deficit of 5 billion Swiss francs in August, citing extraordinary costs from tackling the pandemic and supporting new arrivals from Ukraine.

It unveiled a draft 2023 budget in June that was roughly balanced thanks to booking an expected 1.7 billion Swiss francs in aid to Ukrainian refugees as extraordinary costs.

On Wednesday it proposed adding another 4 billion in 2023 spending, mainly for a financial safety net it has set for the power generation sector. That brought the financing deficit to 4.8 billion francs next year.

The government last week sounded the alarm over what it called "worrying budgetary developments" as parliament deliberates public finances, noting unfunded spending increases threatened to produce high structural deficits.

It cited extra money envisaged for the military, efforts to address climate warming, subsidies for the state railways and child care, and possible consumer relief for high energy prices.

"In the foreseeable future, it is unlikely to be possible to make room in the federal budget for additional burdens of this magnitude by means of cost-cutting measures," the government said last week, adding new spending had to be offset by additional receipts or savings elsewhere.

($1 = 0.9888 Swiss francs) (Writing by Rachel More and Michael Shields Editing by Paul Carrel and John Revill)