At the end of 2019, the Fiscal Council held a regular consultation with experts in public finance and economic policy. Participants to the meeting were Marijana Bednaš, Anže Burger, Saša Jazbec, Bogomir Kovač, Janez Šušteršič and Boštjan Vasle. On the initiative of the Fiscal Council, the discussion touched upon two broad areas: fiscal rules and long-term fiscal sustainability.
According to the participants, the fiscal rules must impose stringent limitations on excessive budgetary spending and contribute to stabilising the cyclical position of the economy. Although, in terms of methodology, it is difficult to determine the cyclical position and thus accurately assess compliance with fiscal rules, the benefits of fiscal rules are obvious. This raises the question of whether the existing fiscal rules ensure the conducting of a counter-cyclical fiscal policy, in particular the achievement of adequately large public surpluses in favourable economic conditions that subsequently also open up room for manoeuvre amid a cooling economy to a sufficient extent. Since the national fiscal rule imposes expenditure ceilings, economic policy makers should take greater account of the precautionary principle, while paying much more attention to the quality and structure of expenditure within the ceilings determined by the fiscal rule.
Economic policy-makers must also swiftly address the challenges associated with the expected economic slowdown and the longer term demographic changes in particular. Accordingly, the question arises as to whether the years of favourable economic conditions have been sufficiently used to create the fiscal space needed to address the slowdown in economic activity. Furthermore, some participants in the consultation believed that tackling the consequences of demographic change would not only require measures on the expenditure side but also finding additional resources or restructuring the public revenues.