The Fiscal Council is of the opinion that the content of the 2015 spring forecast of the Ministry of Finance makes it a suitable basis for the development of the state budget strategy. It provides a good reflection of the expected developments of the external environment and gives an adequate description of the government’s spending opportunities and the risks related to revenues.

Although the economic growth outlook has deteriorated slightly in comparison to the previous forecast, tax revenue will remain good in the coming years. Despite this, the nominal balance of the budget will only be achieved in 2018 and the Ministry of Finance is of the opinion that the structural budget position will be in deficit from 2017–2018. The new coalition agreement, which will deteriorate the budget position, has not yet been considered in the forecast.

Pursuant to the State Budget Act, the structural budget position of the government sector must not be in deficit; nor is this economically justified in the next few years. In order to avoid this, it is necessary to take steps in the preparation of the state budget strategy to strengthen both the nominal and structural budget positions.

The Fiscal Council held its regular meeting to discuss the 2015 spring forecast of the Ministry of Finance on 23 April in Tartu. The Fiscal Council’s opinion on the forecast and a more thorough explanatory report can be found here: Fiscal Council Opinion Spring Forecast 2015.pdf

For further information:
Raul Eamets
Chairman of Fiscal Council
Tel: +372 51 40 082
Email: raul.eamets@ut.ee

Background information

Pursuant to the State Budget Act, the Fiscal Council must assess the macroeconomic and fiscal forecasts of the state. The spring forecast of the Ministry of Finance is the basis for the development of the state budget strategy and the stability programme. The state budget strategy in turn provides a direction for the preparation of the stage budgets of coming years.

The Fiscal Council must also give its opinion of the government sector’s structural budget position goals described in the budget strategy and the stability programme, proceeding from the budgetary rules and the need to adjust the structural budget position. Pursuant to the act, the annual state budget must be prepared in such a manner that the government sector budget is at least in structural balance.