Cap. 534 ст. 15Medium term fiscal strategy.

(1) In every financial year, the Government shall lay on the table of the House, the Medium Term Fiscal Strategy made up of a

Medium Term Fiscal Policy Statement and the Fiscal Policy Strategy.

(2) The Medium Term Fiscal Policy Statement shall set forth the Government’s fiscal objectives, strategic priorities and a three-year rolling target for fiscal management together with a description of any underlying assumptions. The macroeconomic and fiscal forecasts shall be endorsed by the Fiscal Council and made public.

(3) In particular, and without prejudice to the provisions of sub-article (2), the medium term fiscal policy statement shall include an assessment of sustainability relating to:

(a) the balance between revenue receipts and expenditure;

(b) the use of capital receipts including open market borrowings for generating productive assets; and

(c) the estimated yearly pension liabilities worked out on actuarial basis, for the next ten years, within such period as Government may, by order, specify.

(4) The macroeconomic framework underlying the Medium Term Fiscal Policy Statement shall contain information on the macroeconomic situation and forecasts for:

(a) the current budget year and at least the next three deflator;

(d) employment and unemployment;

(e) the current account position of the balance of payments;

(f) the methodologies, assumptions and relevant parameters underlying the forecasts;

(g) a statement of the consistency or differences with the forecasts from the European Commission, and, if appropriate, those of other independent bodies, including a comparison of the main economic assumptions;

(h) an ex-post evaluation based on objective criteria, of macroeconomic forecasts of at least four years, clearly identifying forecast errors and biases. The evaluation is to be made public.

(5) The fiscal framework underlying the Medium Term Fiscal Policy Statement shall contain actual results for the two previous budget years, estimated results for the current budget year, spending ceilings for the forthcoming budget year and two further years conditional on the revenue forecasts and consistent with the fiscal rules, and covering:

(a) the total balance of the general government budget as a percentage of Gross Domestic Product (GDP);

(b) the total of the general government recurrent expenditure as a percentage of Gross Domestic Product (GDP);

(c) the total of general government capital expenditure as a percentage of Gross Domestic Product (GDP);

(d) personnel expenses for the general government budget as a percentage of Gross Domestic Product (GDP);

(e) the ceilings on the issuance of guarantees by the Government through the Ministry for Finance;

(f) the primary balance of the general government budget.

(6) The fiscal framework in the Medium Term Fiscal Policy Statement shall also contain:

(a) updated forecasts for the current budget year and three further years and actual results for the two previous budget years for the general government budget and other budgets specified in the general government budget for:

(i) level of budgetary revenues by classification of the main categories of revenues;

(ii) level of budgetary expenditures by economic

(v) capital expenditures;

(vi) level of general government debt;

(vii) any other information which the Minister for Finance may determine as material to the medium term fiscal strategy;

(viii) key assumptions on which the above numbers are based; and

(ix) sensitivity analysis based on objective criteria, taking account of possible changes in macroeconomic conditions, including growth and interest rates. The sensitivity analysis shall be guided by the performance of past forecasts and shall endeavour to take into account relevant risk scenarios.

(b) an explanation of the fiscal policies in relation to fiscal responsibility principles and fiscal rules, and any temporary measures to be implemented to ensure compliance;

(c) an analysis and explanation of medium term fiscal policies with an impact on general government finances broken down into:

(i) revenue policy, including planned changes to taxes and policies affecting other revenues;

(ii) deficit and debt policy, including an analysis of debt sustainability; and

(iii) expenditure policy, including expenditure priorities aggregate expenditure intentions, including for the general government budget and other budgets; and expenditure ceilings and other targets or limits implied by or required by the fiscal rules;

(d) a description of how medium term fiscal targets comply with the required adjustment towards the medium term budgetary objectives compliant with the provisions of this Act;

(e) a fiscal risk statement, based on the independent assessment by the Fiscal Council of the official forecasts produced by virtue of article 13(3)(a) and taking into account the ex post assessment of the Fiscal Council produced by virtue of article 13(3)(e), including any commitments and contingent liabilities not included in the fiscal forecasts, and all other circumstances which may have a material effect on the fiscal and economic forecasts and which have not already been incorporated into the fiscal forecasts, as well as information on the losses and outstanding payments of

(g) an analysis of the consistency of the updated medium term fiscal strategy with the previous medium term fiscal strategy, providing an explanation of significant changes;

(h) projections of each major expenditure and revenue item of the general government with more specifications on the central government and social security level, for the budget year and the following three years based on unchanged policies.

(7) The Medium Term Fiscal Policy Strategy shall set out an aggregated level of the Government’s spending plans for the forthcoming budget year, the three subsequent years, estimated actual results for the current year, and actual results for the two previous years containing:

(a) expenditure priorities and their rationale, including an explanation of how the Government intends to improve policy, the efficiency, effectiveness and equity of service delivery, the quality of its regulatory activities, and its initiatives to reduce barriers to business and encourage private sector growth in various sectors;

(b) the public investment program, including the Government priorities and its justifications for same.

(8) The Medium Term Fiscal Policy Strategy shall contain a statement of responsibility signed by the Prime Minister and the Minister for Finance attesting to the reliability and completeness of the information in the medium term fiscal strategy and compliance with principles of fiscal responsibility.

(9) Pursuant to the 2013 Regulation, the National Medium Term Fiscal Plan, to be published ideally by the 15th April but not later than the 30th April, shall be based on the Medium Term Fiscal Policy Statement and Fiscal Policy Strategy updated with the latest official forecasts as appropriate.

Annual Draft Budget