• The Fiscal Council endorses the outlook for economic growth and inflation described in the spring forecast of the Ministry of Finance
• In 2017 the general government budget position was in structural deficit, which is in breach of the target set  when the budget was drawn up
• The measures planned in the state budget strategy are not sufficient to meet the goal of structural balance

In the opinion of the Fiscal Council the spring forecast 2018 of the Ministry of Finance gives an adequate picture of the outlook for the Estonian economy and inflation, and is in line with the forecasts of other institutions. The Fiscal Council finds that the risks of faster or slower growth are broadly balanced. The number of recent tax changes mean that the risks to the tax revenue outlook lean to the downside.

Estimates by the Ministry of Finance put the structural budget deficit for the general government at 0.3% of GDP in 2017. The Fiscal Council finds this to be in breach of the surplus target that was set when the budget was drawn up.

The spring forecast of the Ministry of Finance shows the structural deficit will be larger in 2019 and 2020 than is allowed by the State Budget Act. For this reason the government has taken additional revenue and spending measures in the State Budget Strategy 2019-2022, which will improve the budget position, and is targeting structural balance for the years ahead.

The Fiscal Council finds that the budget goals that have been set are in line with the State Budget Act, but achieving them assumes that the budget position can be improved to the extent planned. The materials received by the Fiscal Council do not explain the revenue and spending measures introduced in the state budget strategy well enough, and their impact has been assessed only approximately. For this reason the Fiscal Council finds that those measures are not sufficient to meet the goal of structural balance.

Unlike in earlier years, the general government budget was in structural deficit in 2017 and it will be again in 2018. This is in spite of the strong growth in the economy. So that the flexibility built into the budget rules could be used in future should the economy take a turn for the worse, the Fiscal Council recommends that a structural surplus should be planned for 2019.

The Fiscal Council's opinion and a more thorough explanatory report can be found here: Opinion on the spring forecast 2018 of the Ministry of Finance and on the targets for the structural budget position for 2019-2022

Additional information:
Raul Eamets
Chairman of Fiscal Council
Tel: +372 514 0082
Email: raul.eamets@ut.ee

Andrus Alber
Vice-Chairman of the Fiscal Council
Tel: +372 526 1707
Email: andrus.alber@eelarvenoukogu.ee