Evaluation of the General Government Budget Proposal for 2019-2021

Favourable economic conditions are significantly contributing to improvements in the fiscal performance of public finances. As regards meeting the objectives under the Fiscal Responsibility Act, the budget proposal of the government does not make full use of these positive effects to achieve the long-term sustainability of public finances. The budgetary objectives are counteracted, in 2019 and 2020, by risks quantified at 0.6 % of GDP which would mean that, if these risks indeed materialise, the medium-term budgetary objective and a balanced budget could be achieved in 2019 and, respectively, 2020, only through the adoption of additional measures. The debt level is expected to drop below the sanction zones in 2018; however, there is a risk that the first threshold could be slightly overrun between 2019 and 2021. The government’s planned improvement in fiscal performance in 2019 will contribute to improving the long-term sustainability of public finances. On the other hand, due to the objectives that are worsening the government's fiscal performance between 2020 and 2021 in comparison with the no-policy-change scenario, the overall long-term sustainability will worsen as well. Transparency and credibility of the budget might be increased by means of strengthening the binding nature of using the tax forecasts approved by the independent Tax Revenue Forecasting Committee and by means of an independent assessment of the amount of non-tax revenues.

 
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