In April 2016, the newly formed government decided to postpone the meeting of the medium-term objective from 2017 to 2019, failing thus to take advantage of positive effects, including a favourable economic development, to accelerate consolidation efforts and bring the gross debt below the sanction thresholds; the CBR views this as negative, in particular with respect to the purposes of the constitutional Fiscal Responsibility Act.
The CBR appreciates that the budget proposal specifies a majority of measures included in the budget and that the fiscal framework for 2018 and 2019 is based on more realistic assumptions compared with the previous practice. Though the CBR has identified certain risks and concluded that additional measures need to be adopted to meet the budgetary objectives, meeting the medium-term objective of a structurally balanced budget in 2019 can be considered realistic.
With the deadline for meeting the medium-term objective postponed, backed by a favourable economic development which will contribute the most to deficit reduction, room has been created for improving the deficit without the necessity to adopt any major consolidation measures. As estimated by both the budget proposal and the CBR, the gross debt should remain within the first sanction threshold by the end of 2019. Even though meeting the medium-term budgetary objective in 2019 is realistic, it would be desirable for the government to take further measures designed to bring the debt below the sanction thresholds and take advantage of potential unexpected positive effects to speed up consolidation.