Public Expenditure Ceilings methodology

Public expenditure ceilings are always calculated based on methodology which is valid to the 1st January of the year of their calculation. The ceilings are then approved by a generally binding parliament resolution which is published in the Collection of Laws. They are regularly updated. The updates must be submitted to and passed by the Parliamentary Committee for Finances and Budget and the Parliamentary Committee for Economic Affairs.

Regular updates are conducted by the CBR annually by 30th June, although the ceilings can be updated anytime based on a government request or CBR’s initiative under specified conditions. The ceilings are updated mainly by the impacts of legislative changes on general government revenue or long-term sustainability of public finances and by differing development of certain variables not subject to the ceilings, compared to their estimates at the time of the calculation of ceilings.

The evaluation of compliance with the public expenditure ceilings is published by the CBR every year by 15th June. The difference between the reported expenditure level and the applicable ceiling for the given year is also reflected in the update of the ceiling, i.e. if the ceiling is exceeded in one year, the next year’s ceiling will be reduced by the corresponding amount.

The ceilings also respond to extraordinary situations defined by law in which there are substantial changes to the economic assumptions, such as economic recession.