Opinion on the second amending budget bill for the year 2017

The macroeconomic scenario attached to the second amending budget bill for the year 2017 is unchanged since the 2018 budget bill.

The High Council considers that the new information available since its opinion on the 2018 budget bill in September confirms that the growth and wage bill forecasts for 2017 are cautious. Given the carry-over growth from the third quarter, there now is a quite strong likelihood that the 2017 growth will exceed the Government’s forecast. The High Council regards the inflation forecast for 2017 as realistic.

It considers that revenues from compulsory levies could still be slightly higher than the Government’s estimate for 2017, subject to uncertainties on the receipts of some taxes and on the national accounting treatment of several measures.  

The High Council notes that there are still risks on the public expenditure forecast for 2017, which has been slightly revised upwards from the forecast attached to the 2018 budget bill. The main uncertainty is on local investment spending.

Subject to the aforementioned uncertainties, the High Council considers that the public deficit forecast at 2.9 point of GDP for 2017 is plausible. It emphasizes that a significant reduction of the public deficit is still needed to start a durable reduction of the public debt to GDP ratio.

The High Council notes that the structural effort would be almost inexistent in 2017 and very low in 2018, despite the fact that the structural balance is still far from its medium term objective, and that improving economic conditions build a more favorable basis for the realization of such an effort.