Fiscal Database

Long-term Sustainability Risk of Public Finances

Public finances are considered sustainable in the long term if public debt, without policy changes, remains below the upper limit of the debt brake in the coming decades. In other words, the debt would remain under control in current legislative settings. The Council for Budget Responsibility (CBR) regularly assesses the long-term sustainability of public finances by calculating the long-term sustainability indicator. This indicator reflects the necessary fiscal improvement to achieve long-term sustainability of public finances over the long horizon as a percentage of GDP.

The indicator is divided into three risk levels:

  • Low Risk – indicator value less than 1% of GDP,
  • Medium Risk – indicator value between 1% and 5% of GDP,
  • High Risk – indicator value above 5% of GDP.

Any legislative adjustment with a long-term impact on public finance has an impact on long-term sustainability. This may include changes to the pension system, introduction of new social benefits, and similar adjustments. A deterioration in the state of public finance is reflected in an increase in the indicator, whereas improvement or fiscal consolidation is shown by a decrease in the indicator.

Further details on the long-term sustainability indicator can be found in the Long-term Sustainability section.