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Published: 02/09/2022

Public Finance and Macroeconomic Developments, February 2022

Given the high economic growth and the fact that the pre-crisis GDP level has been reached in the middle of the year, the relatively favourable fiscal results of last year were in line with expectations. In 2021, the state budget deficit amounted to EUR –3,080 million or EUR –685 million not counting the direct effect of COVID measures. The deficit was therefore nearly EUR 900 million lower than the outturn estimated by the Ministry of Finance in September. The fact that the outturn was more favourable than the estimation that formed the basis for the preparation of the 2022 and 2023 budget documents is mostly due to overestimated assumptions on expenditure growth at the end of last year, which is consistent with the Fiscal Council’s expectations.

The current boom is concealing the deteriorating structural fiscal balance. The discretionary measures of a structural nature adopted during the crisis, not related to the epidemic, will continue to worsen the fiscal balance by approximately 2% of GDP per year, amounting to around EUR 1.2 billion in 2022 alone. Coupled with the absence of appropriate compensatory measures, this is undermining medium- and long-term fiscal sustainability.

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