Evaluation of compliance with the balanced budget rule in 2017

The 2017 general government’s structural deficit reached 1.02 % of GDP, which means that the medium–term objective of having a close to balanced budget (structural deficit of not more than 0.5 % of GDP) was not met so far. As identified by the CBR in the primary assessment, the structural balance improvement was 0.42 % of GDP higher than required by the rule, whereas for the expenditure benchmark, the deviation amounted to 0.18 % of GDP. With the additional factors taken into account (lower interest payments and windfall revenues), the structural balance deviation reached 0.20 % of GDP, i.e., below the threshold of 0.5 % of GDP. On the contrary, the additional factors (lower co-financing expenditures and increased efficiency of VAT collection) improved the development of adjusted expenditures, by which the rule was met by 0.05 % of GDP. Convergence towards the medium-term objective was not sufficiently fast when taking into account additional factors. At the same time, however, the deviation permitted by the rule was not exceeded; and as the deviation identified was not considered as significant according to the CBR, there is no need to trigger the correction mechanism.

 
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