Report on the Long-term Sustainability of Public Finances (April 2017)

This means that under the current macroeconomic scenario, demographic development and policy assumptions (i.e., the baseline scenario), the debt should not exceed the upper constitutional limit (50 % of GDP) until 2066. Under current policies, the debt should decline below 20 % of GDP in the next 20 years, which will create sufficient room for it to spring back towards the constitutional limit at the end of the period when the impacts of negative demographic development are expected to culminate.

Therefore, in setting its medium-term budgetary objectives the government should take into account the baseline scenario, the materialisation of which a necessary condition for keeping public finances on a sustainable basis in the long term. In the medium term, the government should make full use of the currently favourable macroeconomic conditions, coupled with reduced expenditures resulting from the measures adopted under the pay-as-you-go pension system pillar, in order to attain a surplus of 0.4 % of GDP by 2020 and reduce the debt to 43 % of GDP. The objectives defined by the government in the 2017-2020 Stability Programme for the years 2017 to 2019 are in line with the long-term sustainability of public finances. Nevertheless, once the 2020 objective has been met, the government will have to take additional measures worth 0.3 % of GDP to bring public finances on a sustainable basis in the long run.