The state budget had a surplus of EUR 94 million according to preliminary data during the first two months of 2022, or EUR 240 million not counting the direct effect of COVID measures. The state budget balance in both comparisons was better than in the same period last year, which is mainly the result of the revenue growth as economic activity has recovered. The considerable expansion in the beginning of the year is, to a great extent, concealing the deteriorating structural fiscal balance.
Revenue in the first two months of 2022 on a year-on-year basis was 34.7% higher, or 32.0% higher without taking into account the direct effect of COVID-related measures.
Expenditure in the first two months of this year was –8.9% lower on a year-on-year basis, or 9.5% higher without taking into account the direct effect of COVID measures.
The total level of state budget expenditure for COVID-related measures from March 2020 to the end of February 2022 amounts to EUR 4.965 billion, EUR 171 million of that in the first two months of 2022.
The geopolitical situation poses a high downside risk to public finances, notably through the impact of slowing economic activity and consumer spending on government revenues. Related to this, various subsidies to cushion the impact of rapid price increases also pose a risk of a significant increase in government expenditure, while other risks include in particular the already adopted, but not yet implemented, public sector wage increases and the already expressed demands for additional wage increases. The aggravated geopolitical situation also introduces uncertainty for the conduct of fiscal policy in the year ahead. A decision on the foreseen abolition of the general escape clause in 2023 will be taken on the basis of the EC’s spring forecast by the end of May. Given the risks associated with the geopolitical situation, it is also the EC’s assessment that it is necessary to maintain support of economic growth while limiting any structural deterioration in public finances in order to ensure a sustainable level of indebtedness in the medium term.