The government did not meet its budget targets for 2019 April 30, 2020

The government’s target for the budgetary position in 2019 was to make sure that the structural deficit was reduced by at least 0.5% of GDP from the deficit of 1.7% of GDP that was recorded in 2018.

The spring 2020 assessment by the Ministry of Finance put the structural budget deficit for the general government at 1.9% of GDP for 2019. This means the structural budgetary position was not improved from 2018 but had actually deteriorated.

The Fiscal Council finds that the government did not meet its budget targets for 2019 or reduce the deficit as required by the fiscal rules. The emergency situation caused by the outbreak of coronavirus means that the government does not have to improve the budgetary position in 2020.

The general government deficit has been larger than expected in the past two years, and this has caused the fiscal rules to be broken. Abiding by the rules and building up reserves when the economy is doing well is important if the economy is to be given support during difficult times.

The Fiscal Council finds it important that by autumn 2020 at the latest the government submit a long-term outlook for the state finances together with the steps to be taken to return the budget to balance.

The Fiscal Council's opinion and a more thorough explanatory report can be found here.

Additional information:
Raul Eamets
Chairman of Fiscal Council
Tel: +372 514 0082