Coalition agreement is a key government document and includes a package of measures that it plans to adopt during its term of office. Like on all previous changes of government since its establishment, the Fiscal Council has made an assessment of fiscal impacts, while not assessing the appropriateness of the announced fiscal measures. The Fiscal Council’s assessments are not a projection of actual fiscal trends, but provide an overview of the order of magnitude of risks arising from the implementation of the measures.
Like in all three previous coalition agreement evaluations, the basic conclusion is that, this time, too, the coalition agreement does not pursue best practices, as it only allows for the financial evaluation of around a tenth of all identified measures. Most of the measures that can be financially evaluated have a predominantly negative impact on public finances, while many of the announced measures that could contribute to a more efficient functioning of the state are mostly of a general nature and without a clear implementation timeline.
The initial state of public finances points to increasingly diverging from ensuring sustainability in the coming years and requires consolidation. In such circumstances, meeting the basic commitment of the coalition agreement regarding compliance with fiscal rules would restrict the introduction of the announced measures. The possible positive effects of the measures announced in the coalition agreement on economic activity and savings due to more efficient functioning of the state would not be sufficient to offset their predominantly unfavourable fiscal effects. Even if potentially higher economic growth and greater efficiency were to mitigate some of these effects, this would become apparent only gradually and with a delay. Therefore, even if the aforementioned measures were introduced gradually, public finances would structurally deteriorate after the full implementation of such measures without additional compensatory measures.
In the future, it would be crucial to adequately and comprehensively assess the fiscal effects of the planned policies and new measures. It would be reasonable for the government to make an assessment of fiscal effects, the implementation timeline, and the impact on meeting the commitments set out in the medium-term fiscal and structural plans for all major measures when preparing budget documents.