The Slovenia Times

Future government warned sustainable fiscal policy needed


"Stakeholders participating in the forming of the future coalition must bear in mind that early on in its term, the government faces decisions whose horizon goes beyond the political cycle. These decisions may not jeopardise fiscal consolidation," the Fiscal Council said in a statement issued on Thursday.

It said the current fiscal policy was expansionary, which is "inappropriate considering the current position in the economic cycle and represents a missed opportunity to improve public finances on a more permanent basis."

This is important "in light of growing risks, especially external risks," the council said, noting that these risks may lead to a slowdown of economic growth beyond the current forecasts.

The statement accompanies a periodic analysis of fiscal and macroeconomic trends which the Fiscal Council says indicate that the economy will overheat this year, the output gap having already closed on the back of four years of brisk growth.

Despite the risk of overheating, however, the Fiscal Council does not yet see the emergence of major macroeconomic imbalances.

The latest forecasts indicate that Slovenia's economic growth, which has far outpaced the eurozone's, will slow down by about a percentage point next year.

The Fiscal Council has been warning for months that Slovenia should leverage the currently favourable macroeconomic conditions to accelerate the consolidation of public finances.


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