The general government structural deficit in 2014 reached 2.8 % of GDP, up 0.4 % of GDP year-on-year. Thus the medium-term objective of attaining a nearly balanced budget (structural deficit up to 0.5 % of GDP) was not achieved.
As a result of considerable consolidation in 2013 and fiscal easing in 2014, the structural balance in 2014 reached the level set by the adjustment path towards meeting the objective by 2017. This conclusion is also confirmed by the evaluation of the development in the adjusted expenditure which, since 2012, increased in line with the expenditure benchmark. In light of the above, the CBR concludes that no significant deviation occurred in 2014 and hence there is no need to trigger a correction mechanism.
The conclusions of the CBR’s independent evaluation are basically identical with the position of the Ministry of Finance. The approach of both institutions is identical in that the evaluation covers cumulative deviations since 2012 which are analysed against the assumption of steady improvements in the structural balance. The difference between estimates of the business cycle on the budget balance is now much smaller.
When it comes to one-off effects, the two approaches continue to differ in the way in which certain revenues from dividends are recognised. In evaluating compliance with the expenditure benchmark, the CBR uses a broader list of measures based on its own ‘no-policy-change’ scenario while excluding one-off effects and cyclical expenditures on pensions from the calculation of adjusted expenditures. The Ministry of Finance took one-off measures into account within its qualitative evaluation of developments in 2014 (the so-called overall assessment). However, all these methodological differences have had a minimal impact on the overall assessment.