Pursuant to the Fiscal Rules Act (ZFisP, Official Gazette of the Republic of Slovenia (Uradni list RS), No. 55/15, points (2) 1 and (2) 8 of Article 7), the Fiscal Council is obliged to submit its opinion on the Stability Programme and on the amendments to the framework regarding sustainability and compliance of the fiscal policy with the fiscal rules.
Below an assessment of the fiscal policy on the basis of the draft amendment to the Stability Programme 2017 and the proposal for amendments to the Ordinance on the framework for the preparation of the general government budgets for the 2018-2020 period are presented; it was also prepared by using data and analyses from the Institute of Macroeconomic Analyses and Development, because the Fiscal Council only started to operate on 22 March of this year.
The Fiscal Council assesses that the draft amendment to the Stability Programme 2017 and the proposal for amendments to the framework for the preparation of the budgets have been drawn up in accordance with the rule on the limitation of the headline deficit below 3% of GDP and the debt rule. An assessment of compliance with the expenditure rule cannot be made on the basis of data contained in the draft amendment to the Stability Programme 2017.
The Stability Programme and the Ordinance envisage a structural effort that is too low with regard to EU rules and significant foreign and domestic risks. Moreover, the Stability Programme does not define the measures to achieve such an effort with sufficient precision.
The Fiscal Council expects that in 2017 the Government of the Republic of Slovenia will prepare a set of additional measures accounting to 0.2% of GDP for 2017 so as to achieve an average structural effort of 0.6% of GDP in 2016 and 2017 or at least an appropriately increased fiscal effort for 2018 and 2019 by 0.2% of GDP in these two years. In this respect it must also be considered that in 2016 a significant part of the structural effort was achieved through a substantial drop in the utilisation of EU funds and investments respectively, which does not provide a solid foundation for the fiscal balancing.
In the Stability Programme and in the framework for the preparation of the budgets in the following years, public expenditure must be limited so as to achieve the structural balance objective already in the middle of the programme period and to maintain it in the following years when the upper limit of the planned level of expenditure referred to in Article 3 of the Fiscal Rules Act must be taken into consideration.