Opinion on the amending budget bill for the year 2016

In accordance with Articles 15 and 16 of the Organic Law of 17 December 2012, the High Council of public finance (HCFP) received the referral file from the Government. The referral file contains the introductory article of the amending budget bill for 2016 and the “economic and Financial framework of the amending budget bill for 2016” including “updated macroeconomic forecasts” and “updated public finances forecasts in 2016 and 2017”. The HCFP chooses to treat the referral based on those two articles in one opinion.

Regarding 2016

The High Council notes that the Government’s growth forecast, revised downwards from 1.5% to 1.4% for 2016, is still in the upper range of available forecasts. Nevertheless, it considers that this forecast is achievable.

Given the information published since its previous opinion, the High Council regards the Government’s inflation, employment and private-sector wage bill forecasts for 2016 as realistic.

The High Council notices that the structural balance for 2016 complies with the objective set out in the public finance programming law (LPFP) of 29 December 2014. The structural deficit estimate, of 1.6% of GDP with the potential growth assumptions from the LPFP, lies below the objective of 1.8% of GDP in that law. However, the structural adjustment in 2016 is less than the objective set out in the Stability Program of April 2016 and the minima set out in the European regulation n°1467/97.

The High Council is of the opinion that the deficit forecast of 3.3% of GDP in 2016 is realistic. It depends on the strict management of public expenditure at the end of the year.

Regarding 2017

As was done in the previous opinion on the budget bill for 2017, the High Council observes that the unaltered growth assumption made by the Government for 2017 (1.5%) remains above the “Consensus Forecasts” (1.2% in November) and the forecasts of international governmental organizations (1.3% for the IMF, 1.4% for the European Commission).

As regards public finances, the High Council confirms the assessment made in its previous opinion on the budget bill and the social security financing bill forecasts for 2017.