www.fs-rs.si / News / News / Assessment by the Fiscal Council: Compliance of the general government budgets with the fiscal rules in 2022
Published: 06/13/2023

Assessment by the Fiscal Council: Compliance of the general government budgets with the fiscal rules in 2022

In 2022, the general government deficit was high (-3.0% of GDP), despite a decrease compared to the previous year, which was mainly due to the smaller scope of the intervention measures. The deterioration in the fiscal position excluding this effect was mainly due to a significant decline in the revenue-to-GDP ratio, mainly as a result of the slower growth in the wage bill following the expiry of the COVID-19 benefits. This has not been matched by public spending in a favourable economic environment marked by continued cyclical momentum following the calming of the epidemic, but also by high inflation. Fiscal policy was expansionary-oriented, which was not appropriate in a very favourable cyclical context. On the expenditure side, this was mainly due to a further strengthening of investment activity, financed exclusively by domestic resources. The growth of domestic general government current spending also picked up, which should have been lower relative to other developments in public finances, at least in the part not related to mitigating the impact of high inflation. The inappropriate expansionary stance of fiscal policy in 2022 is confirmed by the indicative quantitative assessments, according to which most fiscal rules were not complied with last year. As a result, general government expenditure last year was significantly higher than the currently estimated maximum permissible level. The latter is, in fact, lower than the ceiling of the last applicable multiannual framework adopted in September last year, which, however, the Fiscal Council already assessed at that time as too high. Last year, only the reduction of the gross debt-to-GDP ratio to 69.9% complied with the existing rules, mainly due to the inflationary increase in nominal GDP.

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