Evaluation of the General Government Budget Proposal for 2016-2018 (November 2015)

According to the Ministry of Finance, the government’s budgetary objectives and the ensuing consolidation are more ambitious than the level of consolidation required under the EU fiscal rules1. The likely failure to attain the budgetary objective in 2015 and the existence of additional risks which go beyond the estimate presented in the budget proposal represent a risk for the years to come. While the budget proposal is detailed in explaining those government steps which, for the most part, increase the deficit, it lacks a detailed explanation of consolidation measures. Moreover, not all the measures necessary to meet the 2017 and 2018 objectives have yet been specified.

The meeting of these objectives may also be influenced by the fact that the budget implementation will be largely in the hands of the new government which will have to adopt sufficient measures in the medium term to attain a structurally balanced budget. According to the budget proposal, the debt level should dip just below the first sanction threshold in 2018. With the expected consolidation incorporated into the economic forecast, the CBR sees the gross debt at the end of 2018, even if the budgetary objectives are met, within the first sanction zone.