The government has set the target in the state budget strategy 2024-2027 of not letting the general government structural budget deficit exceed 1% of GDP. It is forecast that this goal will be achieved by 2025. The Fiscal Council finds that the current domestic fiscal rules do not allow the target for the structural deficit to be set so low nor allow such a small improvement in the fiscal position to be planned for the coming years. The Fiscal Council consequently finds that the budgetary targets set in the state budget strategy do not comply with the requirements of the State Budget Act.

Together with the state budget strategy 2024-2027, the government is planning changes to the domestic fiscal rules that would come into force in 2024. The changes would ease the current requirements for setting the budgetary targets to comply with the State Budget Act. Although the new fiscal rules would be in line with the requirements of the European Union, the Fiscal Council is critical of the timing and partially of the content of the change to the rules.

Even complying with less stringent fiscal rules would demand large changes in the current fiscal policy path. The forecast by the Ministry of Finance finds that meeting the targets set in the budget strategy would require an improvement in the budgetary position of around 3.7 billion euros for the next four years in total. The budget strategy contains a lot of new revenue and expenditure measures for this, some of which are still a work in progress.

Large changes in fiscal policy also have a knock-on impact on the macroeconomy, but there is no thorough analysis of this in the budget strategy. The Fiscal Council would like to repeat its recommendation that the budget strategy should go back to being written in the spring, and should not be handled at the same time as the state budget for the next year, when time pressures are much greater.

Overall the Fiscal Council welcomes the desire of the government to start to improve the fiscal position. It notes however that the targets for the general government structural fiscal position set in the state budget strategy 2024-2027 only comply with the State Budget Act if it is assumed that the planned changes to the domestic fiscal rules come into force in 2024. Even in this case, achievement of those goals will depend largely on new fiscal measures that have in some cases not yet been made law or even described in detail.

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