{"id":18799,"date":"2023-06-16T12:36:15","date_gmt":"2023-06-16T10:36:15","guid":{"rendered":"https:\/\/www.rrz.sk\/?p=18799"},"modified":"2023-06-21T13:17:31","modified_gmt":"2023-06-21T11:17:31","slug":"medium-term-fiscal-outlook-for-2023-2026","status":"publish","type":"post","link":"https:\/\/www.rrz.sk\/en\/medium-term-fiscal-outlook-for-2023-2026\/","title":{"rendered":"Medium-term fiscal outlook for 2023-2026"},"content":{"rendered":"

Key conclusions and recommendations<\/strong><\/p>\n

The previous government submitted the Stability Programme of the Slovak Republic for years 2023-2026 (SP), in which it presented an updated fiscal framework of the general government for the upcoming period. It provides information on the direction of the government\u2019s fiscal policy, sets the target values for the general government deficit for the period covered, and quantifies the measures the government expects to be taken to meet the declared budgetary objectives.<\/p>\n

Compared to the originally budgeted general government deficit of 6.4% of GDP in 2023, the government currently estimates a slight decline in the deficit to 6.3% of GDP. In 2024, the fiscal framework (i.e., the budgetary path without additional measures) foresees a year-on-year reduction in the deficit to 4.7% of GDP. However, the government intends to achieve lower deficits of 3.9% of GDP in 2024, 3.2% of GDP in 2025 and 2.2% of GDP in 2026, but no measures have been prepared yet for these years to achieve presented targets.<\/strong><\/p>\n

The budget proposal (without additional measures) foresees an increase in the gross debt from 58.7% of GDP in 2023 to 59.3% of GDP in 2024, followed by a further increase to 59.8% of GDP at the end of 2025 and 63.1% of GDP at the end of 2026. The increase is mainly driven by the high deficits expected in the near term. Assuming that budgetary targets would be met, which are at the moment not backed by any measures, the gross debt would start to decline slightly after 2023, reaching 57.7% of GDP at the end of 2026. Irrespective of the targeted discontinuation of debt growth after 2023, the fact remains that debt has stayed above the upper limit of the sanction brackets under the constitutional Fiscal Responsibility Act since 2020 and, according to the Ministry of Finance, it will remain above this limit throughout the entire forecast period.<\/strong> Because the upper limit is decreasing at a rate of 1% of GDP per year, a stabilised debt would also mean moving away from the upper limit.<\/p>\n

Comparison between the GG balance and debt under the Stability Programme and the CBR’s estimate (% of GDP)<\/span><\/strong><\/p>\n

\"2023_06_16_Comparison_between_the_GG_balance_and_debt_under_the_Stability_Programme_and_the_CBRs_estimate\"<\/p>\n

*- the figures for 2024-2026 are based on the targets published in the Stability Programme<\/span><\/h5>\n
Source: MoF, CBR<\/span><\/h5>\n

The purpose of opinions of the Council for Budget Responsibility (CBR, the Council) is to provide an independent view on the budgetary assumptions presented in the Stability Programme and to assess whether the current fiscal policy configuration is sufficient in terms of achieving the targets set, while identifying potential risks that would need to be subsequently eliminated through the adoption of additional measures. In line with its mandate, the CBR also assesses whether the current budget creates the conditions to ensure the long-term sustainability of public finances and to comply with national fiscal rules. To that end, the CBR wishes to highlight the following key conclusions from its evaluation:<\/p>\n