SlideShare a Scribd company logo
1 of 16
Fiscal Council Opinion on the Summer Forecast 
2014 of the Ministry of Finance 
Raul Eamets 
Chairman of Fiscal Council 
Tallinn, 15 September 2014
This presentation 
1) about the Fiscal Council 
2) definition of terms 
3) the summer forecast of the Ministry of Finance in brief 
4) the opinion of the Fiscal Council 
5) questions and interviews
The Fiscal Council 
• set up in 2014 as an independent advisory body charged with assessing 
Estonian fiscal policy 
• issues opinions on the forecasts for the macro and fiscal forecasts and on 
the budget strategy and how the goals of the structural budget position of 
the general government are being achieved 
• meets whenever necessary, but at least five times a year 
• the opinions of the Fiscal Council are published on its website 
www.eelarvenoukogu.ee 
• members: Raul Eamets, Andrus Alber, Ülo Kaasik, Martti Randveer, Urmas 
Varblane and Andres Võrk
Definitions 
• output gap – the difference between actual and potential GDP 
• cyclical budget component – the impact of the business cycle on the budget 
balance 
• cyclically adjusted budget balance – the nominal general government budget 
balance adjusted with the cyclical component 
• one-off factors – revenues or expenditure that are clearly temporary in nature 
and that do not affect the long-term sustainability of the general government 
budget, such as income from CO2 quota sales 
• structural budget balance – the cyclically adjusted budget balance of the 
general government with the effect of one-off factors removed
Output gap 
GDP 
time 
negative gap 
potential GDP 
positive gap 
actual GDP 
- 
+ 
- 
+ 
?
Key Figures for the Economic Forecast for Summer 2014 
• the changes from the spring are reasonable and are mainly due to weak external demand 
• the forecast is an appropriate base for setting fiscal policy but it should be remembered 
that the external environment may remain volatile for some time yet 
MACRO FORECAST summer forecast spring forecast 
KEY FIGURES 2014 2015 2014 2015 
Real GDP growth (%) 0.5 2.5 2.0 3.5 
Nominal GDP growth (%) 3.0 5.8 4.9 6.9 
Change in employment (%) 0.1 0.0 0.2 0.3 
Nominal wage growth (%) 6.0 6.1 6.2 6.3 
Domestic demand growth (%) 2.2 3.3 2.8 3.7 
Real growth in exports of goods 
2.0 3.5 2.4 6.0 
and services (%)
• the forecast of the Ministry of Finance is quite conservative compared to others 
• it should be assessed using information that was available at the time (data were 
adjusted after the forecast was published) 
Forecasts for real GDP growth in Estonia (%) 
Sources: Consensus Forecasts, Eesti Pank, European Commission, OECD, Ministry 
of Finance, International Monetary Fund, Swedbank 
0 1 2 3 4 
OECD (May) 
European Commission (May) 
International Monetary Fund (May) 
Eesti Pank (June) 
Swedbank (August) 
Consensus Forecasts (August) 
Ministry of Finance (September) 
2015 
2014
Forecasts of Estonia’s economic growth for 2014 
Source: Ministry of Finance 
5 
4 
3 
2 
1 
0 
y-o-y % 
MofF EP 
EC IMF 
OECD Swed 
SEB Nordea 
Consensus Forecast 
2011 4 7 10 2012 4 7 10 2013 4 7 10 2014 4 7
• nominal GDP growth and GDP structure should be considered as well as real 
GDP growth 
• wages are increasing strongly 
Nominal wage growth (%) Nominal GDP growth (%) 
2014 2015 2014 2015 
Ministry of Finance 
summer forecast 
6.0 6.1 3.0 5.8 
IMF 7.4 7.2 6.6 8.1 
Eesti Pank 6.0 6.2 4.1 6.6 
European Commission 6.0 6.7 4.7 6.6 
OECD 3.2 5.3
• the government has made tax collection from direct taxes significantly more 
efficient 
The nominal budget position for 2014-2015 has 
changed little since the spring 
MAKE-UP OF THE GENERAL 
GOVERNMENT POSITION Summer forecast 
State Budget Strategy 
2015–2018 
2014 2015 2014 2015 
General government total 
(million euros) 
-38 -90 -135 -111 
state budget 1 -47 -82 -56 
other central government -45 -42 -52 -48 
social security funds 35 37 35 28 
local government -29 -38 -36 -35
The nominal position of the general government is improving faster 
than was forecast in spring 
• the effect of tax policy is clear in the forecast 
• but it is not clear whether the improvement assumes changes in spending policy 
FISCAL POSITION FORECAST 2014 2015 2016 2017 2018 
Nominal position (million euros) 
summer forecast -38 -90 9 77 204 
state budget strategy 2015–2018 -135 -111 -78 13 136 
Nominal position (% of GDP) 
summer forecast -0.2 -0.5 0.0 0.3 0.8 
state budget strategy 2015–2018 -0.7 -0.5 -0.4 0.1 0.5
• estimating the structural budget position (including the output gap and the cyclical 
component) is methodologically complex and can lead to debate 
• most methods used overlook the impact on tax revenues of changes in GDP structure 
Estimates of the output gap for Estonia (% of potential GDP) 
Sources: European Commission, OECD, IMF, Ministry of Finance 
2 
1 
0 
-1 
-2 
-3 
-4 
European Commission 
OECD 
IMF 
Ministry of Finance 
2013 2014 2015 2016 2017 2018
• the output gap will probably be negative for 2014-2015 but the main tax bases, including private 
consumption and the payroll may be higher than their potential and have a positive gap 
• separate assessment of the tax bases gives important additional information about the structural 
position of the budget, while estimates are also affected by revisions of GDP data 
Estimates of the cyclical component of the budget (% of GDP) 
Sources: Ministry of Finance, Fiscal Council 
0.4 
0.2 
0.0 
-0.2 
-0.4 
-0.6 
-0.8 
-1.0 
2013 2014 2015 
Ministry of Finance estimate using 
output gap (summer forecast) 
Fiscal Council estimate using output 
gap (old time series) 
Fiscal Council estimate using output 
gap (new time series) 
Fiscal Council estimate using 
disaggregated approach
The forecast structural fiscal position is strong, but… 
• there is a serious risk that the structural fiscal position is estimated higher than it actually is 
• the Fiscal Council recommends that the planned structural surplus for 2015 should be no 
smaller than the 0.8% of GDP put forward in the summer forecast 
MAKE-UP OF THE 
STRUCTURAL POSITION 
Summer forecast 
State Budget 
Strategy 2015–2018 
2014 2015 2014 2015 
nominal position (% of GDP) -0.2 -0.5 -0.7 -0.5 
cyclical component (% of GDP) -0.9 -0.7 -0.5 -0.2 
cyclically adjusted position (% of GDP) 0.7 0.3 -0.2 -0.3 
one-off factors (% of GDP) -0.2 -0.5 -0.3 -0.5 
structural position (% of GDP) 0.9 0.8 0.1 0.2
Main message from the Fiscal Council 
• the new macro forecast is an appropriate basis to use for drafting the state budget 
• the Fiscal Council finds that the summer fiscal forecast by the Ministry of Finance 
contains too little information on spending 
• various factors such as the changing structure of GDP or revisions to the GDP time 
series mean that the risks in measuring the structural fiscal position are larger than 
usual 
• the output gap will probably be negative for 2014-2015 but the main tax bases 
may be higher than their potential 
• the structural fiscal position for 2014-2015 may have been overestimated 
• the structural surplus for the general government budget should not be smaller 
than the 0.8% of GDP noted in the summer forecast
Contacts for the Fiscal Council 
Chairman Raul Eamets 
raul.eamets@ut.ee 
514 0082 
Secretary to the Fiscal Council 
info@eelarvenoukogu.ee 
www.eelarvenoukogu.ee

More Related Content

What's hot

Comments by Professor Lars Calmfors: Economic Policy Council's 2019 Report
Comments by Professor Lars Calmfors: Economic Policy Council's 2019 ReportComments by Professor Lars Calmfors: Economic Policy Council's 2019 Report
Comments by Professor Lars Calmfors: Economic Policy Council's 2019 ReportVATT Institute for Economic Research
 
Greek Economic Outlook 2015-1017
Greek Economic Outlook 2015-1017Greek Economic Outlook 2015-1017
Greek Economic Outlook 2015-1017Ilias Lekkos
 
Economic Indicators June 2014
Economic Indicators June 2014 Economic Indicators June 2014
Economic Indicators June 2014 SappiHouston
 
Economic Indicators September 2013
Economic Indicators September 2013Economic Indicators September 2013
Economic Indicators September 2013SappiHouston
 
Economic Indicators and Monthly Overview April 2015
Economic Indicators and Monthly Overview April 2015Economic Indicators and Monthly Overview April 2015
Economic Indicators and Monthly Overview April 2015SappiHouston
 
Economic Indicators and Montly Overview September
Economic Indicators and Montly Overview September  Economic Indicators and Montly Overview September
Economic Indicators and Montly Overview September SappiHouston
 
Economic indicators November 2014
Economic indicators November 2014Economic indicators November 2014
Economic indicators November 2014SappiHouston
 
Economic Indicators and Monthly Overview October 2015
Economic Indicators and Monthly Overview October 2015Economic Indicators and Monthly Overview October 2015
Economic Indicators and Monthly Overview October 2015SappiHouston
 
Economic Indicators and Monthly Overview August 2015
Economic Indicators and Monthly Overview August 2015Economic Indicators and Monthly Overview August 2015
Economic Indicators and Monthly Overview August 2015SappiHouston
 
Economic indicators october
Economic indicators octoberEconomic indicators october
Economic indicators octoberSappiHouston
 
Economic indicators and Monthly Overview January 2015
Economic indicators and Monthly Overview January 2015Economic indicators and Monthly Overview January 2015
Economic indicators and Monthly Overview January 2015SappiHouston
 
Economic Indicators February 2014
Economic Indicators February 2014   Economic Indicators February 2014
Economic Indicators February 2014 SappiHouston
 
Economic Indicators July 2014
Economic Indicators July 2014Economic Indicators July 2014
Economic Indicators July 2014SappiHouston
 
Economic Indicators August 2013
Economic Indicators August 2013Economic Indicators August 2013
Economic Indicators August 2013SappiHouston
 
Economic indicators april 2014 houston
Economic indicators april 2014   houstonEconomic indicators april 2014   houston
Economic indicators april 2014 houstonSappiHouston
 
Economic indicators May 2013
Economic indicators May 2013Economic indicators May 2013
Economic indicators May 2013SappiHouston
 
Economic Indicators and Monthly Overview June 2015
Economic Indicators and Monthly Overview June 2015Economic Indicators and Monthly Overview June 2015
Economic Indicators and Monthly Overview June 2015SappiHouston
 
Economic indicators may 2013
Economic indicators may 2013Economic indicators may 2013
Economic indicators may 2013SappiHouston
 
Economic Indicators October 2013
Economic Indicators October 2013Economic Indicators October 2013
Economic Indicators October 2013SappiHouston
 
OP Economic Outlook for Finland February 2017
OP Economic Outlook for Finland February 2017OP Economic Outlook for Finland February 2017
OP Economic Outlook for Finland February 2017Karolina Burmeister
 

What's hot (20)

Comments by Professor Lars Calmfors: Economic Policy Council's 2019 Report
Comments by Professor Lars Calmfors: Economic Policy Council's 2019 ReportComments by Professor Lars Calmfors: Economic Policy Council's 2019 Report
Comments by Professor Lars Calmfors: Economic Policy Council's 2019 Report
 
Greek Economic Outlook 2015-1017
Greek Economic Outlook 2015-1017Greek Economic Outlook 2015-1017
Greek Economic Outlook 2015-1017
 
Economic Indicators June 2014
Economic Indicators June 2014 Economic Indicators June 2014
Economic Indicators June 2014
 
Economic Indicators September 2013
Economic Indicators September 2013Economic Indicators September 2013
Economic Indicators September 2013
 
Economic Indicators and Monthly Overview April 2015
Economic Indicators and Monthly Overview April 2015Economic Indicators and Monthly Overview April 2015
Economic Indicators and Monthly Overview April 2015
 
Economic Indicators and Montly Overview September
Economic Indicators and Montly Overview September  Economic Indicators and Montly Overview September
Economic Indicators and Montly Overview September
 
Economic indicators November 2014
Economic indicators November 2014Economic indicators November 2014
Economic indicators November 2014
 
Economic Indicators and Monthly Overview October 2015
Economic Indicators and Monthly Overview October 2015Economic Indicators and Monthly Overview October 2015
Economic Indicators and Monthly Overview October 2015
 
Economic Indicators and Monthly Overview August 2015
Economic Indicators and Monthly Overview August 2015Economic Indicators and Monthly Overview August 2015
Economic Indicators and Monthly Overview August 2015
 
Economic indicators october
Economic indicators octoberEconomic indicators october
Economic indicators october
 
Economic indicators and Monthly Overview January 2015
Economic indicators and Monthly Overview January 2015Economic indicators and Monthly Overview January 2015
Economic indicators and Monthly Overview January 2015
 
Economic Indicators February 2014
Economic Indicators February 2014   Economic Indicators February 2014
Economic Indicators February 2014
 
Economic Indicators July 2014
Economic Indicators July 2014Economic Indicators July 2014
Economic Indicators July 2014
 
Economic Indicators August 2013
Economic Indicators August 2013Economic Indicators August 2013
Economic Indicators August 2013
 
Economic indicators april 2014 houston
Economic indicators april 2014   houstonEconomic indicators april 2014   houston
Economic indicators april 2014 houston
 
Economic indicators May 2013
Economic indicators May 2013Economic indicators May 2013
Economic indicators May 2013
 
Economic Indicators and Monthly Overview June 2015
Economic Indicators and Monthly Overview June 2015Economic Indicators and Monthly Overview June 2015
Economic Indicators and Monthly Overview June 2015
 
Economic indicators may 2013
Economic indicators may 2013Economic indicators may 2013
Economic indicators may 2013
 
Economic Indicators October 2013
Economic Indicators October 2013Economic Indicators October 2013
Economic Indicators October 2013
 
OP Economic Outlook for Finland February 2017
OP Economic Outlook for Finland February 2017OP Economic Outlook for Finland February 2017
OP Economic Outlook for Finland February 2017
 

Viewers also liked

Search for potential collaborators and students in UJ research fields: Nuclea...
Search for potential collaborators and students in UJ research fields: Nuclea...Search for potential collaborators and students in UJ research fields: Nuclea...
Search for potential collaborators and students in UJ research fields: Nuclea...Rene Kotze
 
Critical issues in Finalization of Financial Statements and IFC
Critical issues in Finalization of Financial Statements and IFCCritical issues in Finalization of Financial Statements and IFC
Critical issues in Finalization of Financial Statements and IFCCA. Pramod Jain
 
Managing crisis world vision
Managing crisis   world visionManaging crisis   world vision
Managing crisis world visionDavid Phillips
 
Ministry of Finance and International Ratings
Ministry of Finance and International RatingsMinistry of Finance and International Ratings
Ministry of Finance and International Ratingsminfingovkz
 
Special Account Reconciliation Statement Form104 1
Special Account Reconciliation Statement Form104 1Special Account Reconciliation Statement Form104 1
Special Account Reconciliation Statement Form104 1IFAD Vietnam
 
World Vision Zika Emergency Response Presentation
World Vision Zika Emergency Response PresentationWorld Vision Zika Emergency Response Presentation
World Vision Zika Emergency Response PresentationAshley Overholser
 
Ministry of Education Update
Ministry of Education UpdateMinistry of Education Update
Ministry of Education UpdateNick Gonzalez
 
BSC Honours in Energy Studies at the University of Johannesburg V2
BSC Honours in Energy Studies at the University of Johannesburg V2BSC Honours in Energy Studies at the University of Johannesburg V2
BSC Honours in Energy Studies at the University of Johannesburg V2John Ledger
 
Building a global teaching profile: Showcasing Open Educational Resources a...
Building a global teaching profile:  Showcasing Open Educational Resources a...Building a global teaching profile:  Showcasing Open Educational Resources a...
Building a global teaching profile: Showcasing Open Educational Resources a...Michael Paskevicius
 
World Vision Leaders Training Course - What is it all about?
World Vision Leaders Training Course - What is it all about?World Vision Leaders Training Course - What is it all about?
World Vision Leaders Training Course - What is it all about?WorldVisionLeaders
 
Applied marine science 2014 University of Cape Town Library Workshop
Applied marine science 2014 University of Cape Town Library WorkshopApplied marine science 2014 University of Cape Town Library Workshop
Applied marine science 2014 University of Cape Town Library WorkshopUCT
 
Rob Pattman seminar at the University of Johannesburg
Rob Pattman seminar at the University of JohannesburgRob Pattman seminar at the University of Johannesburg
Rob Pattman seminar at the University of JohannesburgBrenda Leibowitz
 
Academics’ Perspectives of the Concept: Socially Just Pedagogies – A Universi...
Academics’ Perspectives of the Concept: Socially Just Pedagogies – A Universi...Academics’ Perspectives of the Concept: Socially Just Pedagogies – A Universi...
Academics’ Perspectives of the Concept: Socially Just Pedagogies – A Universi...Jakob Pedersen
 
Shifting Stats: Shaking the Church. World Vision Canada's 2014 Church Leaders...
Shifting Stats: Shaking the Church. World Vision Canada's 2014 Church Leaders...Shifting Stats: Shaking the Church. World Vision Canada's 2014 Church Leaders...
Shifting Stats: Shaking the Church. World Vision Canada's 2014 Church Leaders...WVCNCE
 
Presentation to Ministry of Education Staff - "Only Connect"
Presentation to Ministry of Education Staff - "Only Connect"Presentation to Ministry of Education Staff - "Only Connect"
Presentation to Ministry of Education Staff - "Only Connect"Chris Kennedy
 
Higher Education Reform Ministry Of Education
Higher Education Reform  Ministry Of  EducationHigher Education Reform  Ministry Of  Education
Higher Education Reform Ministry Of EducationDavid Deubelbeiss
 
2016 ICSAN MCPE Understanding the Financial Reporting Council (FRC)
2016 ICSAN MCPE Understanding the Financial Reporting Council (FRC)2016 ICSAN MCPE Understanding the Financial Reporting Council (FRC)
2016 ICSAN MCPE Understanding the Financial Reporting Council (FRC)Uto Ukpanah
 
Lawrence Kiguro: Climate change response initiatives by World Vision Kenya #B...
Lawrence Kiguro: Climate change response initiatives by World Vision Kenya #B...Lawrence Kiguro: Climate change response initiatives by World Vision Kenya #B...
Lawrence Kiguro: Climate change response initiatives by World Vision Kenya #B...World Agroforestry (ICRAF)
 
Mooc activity @university of johannesburg
Mooc activity @university of johannesburgMooc activity @university of johannesburg
Mooc activity @university of johannesburgNemuel Alfa
 
University of Johannesburg Orange Carpet Rewards Programme
University of Johannesburg Orange Carpet Rewards ProgrammeUniversity of Johannesburg Orange Carpet Rewards Programme
University of Johannesburg Orange Carpet Rewards ProgrammeKarishma Ganpath
 

Viewers also liked (20)

Search for potential collaborators and students in UJ research fields: Nuclea...
Search for potential collaborators and students in UJ research fields: Nuclea...Search for potential collaborators and students in UJ research fields: Nuclea...
Search for potential collaborators and students in UJ research fields: Nuclea...
 
Critical issues in Finalization of Financial Statements and IFC
Critical issues in Finalization of Financial Statements and IFCCritical issues in Finalization of Financial Statements and IFC
Critical issues in Finalization of Financial Statements and IFC
 
Managing crisis world vision
Managing crisis   world visionManaging crisis   world vision
Managing crisis world vision
 
Ministry of Finance and International Ratings
Ministry of Finance and International RatingsMinistry of Finance and International Ratings
Ministry of Finance and International Ratings
 
Special Account Reconciliation Statement Form104 1
Special Account Reconciliation Statement Form104 1Special Account Reconciliation Statement Form104 1
Special Account Reconciliation Statement Form104 1
 
World Vision Zika Emergency Response Presentation
World Vision Zika Emergency Response PresentationWorld Vision Zika Emergency Response Presentation
World Vision Zika Emergency Response Presentation
 
Ministry of Education Update
Ministry of Education UpdateMinistry of Education Update
Ministry of Education Update
 
BSC Honours in Energy Studies at the University of Johannesburg V2
BSC Honours in Energy Studies at the University of Johannesburg V2BSC Honours in Energy Studies at the University of Johannesburg V2
BSC Honours in Energy Studies at the University of Johannesburg V2
 
Building a global teaching profile: Showcasing Open Educational Resources a...
Building a global teaching profile:  Showcasing Open Educational Resources a...Building a global teaching profile:  Showcasing Open Educational Resources a...
Building a global teaching profile: Showcasing Open Educational Resources a...
 
World Vision Leaders Training Course - What is it all about?
World Vision Leaders Training Course - What is it all about?World Vision Leaders Training Course - What is it all about?
World Vision Leaders Training Course - What is it all about?
 
Applied marine science 2014 University of Cape Town Library Workshop
Applied marine science 2014 University of Cape Town Library WorkshopApplied marine science 2014 University of Cape Town Library Workshop
Applied marine science 2014 University of Cape Town Library Workshop
 
Rob Pattman seminar at the University of Johannesburg
Rob Pattman seminar at the University of JohannesburgRob Pattman seminar at the University of Johannesburg
Rob Pattman seminar at the University of Johannesburg
 
Academics’ Perspectives of the Concept: Socially Just Pedagogies – A Universi...
Academics’ Perspectives of the Concept: Socially Just Pedagogies – A Universi...Academics’ Perspectives of the Concept: Socially Just Pedagogies – A Universi...
Academics’ Perspectives of the Concept: Socially Just Pedagogies – A Universi...
 
Shifting Stats: Shaking the Church. World Vision Canada's 2014 Church Leaders...
Shifting Stats: Shaking the Church. World Vision Canada's 2014 Church Leaders...Shifting Stats: Shaking the Church. World Vision Canada's 2014 Church Leaders...
Shifting Stats: Shaking the Church. World Vision Canada's 2014 Church Leaders...
 
Presentation to Ministry of Education Staff - "Only Connect"
Presentation to Ministry of Education Staff - "Only Connect"Presentation to Ministry of Education Staff - "Only Connect"
Presentation to Ministry of Education Staff - "Only Connect"
 
Higher Education Reform Ministry Of Education
Higher Education Reform  Ministry Of  EducationHigher Education Reform  Ministry Of  Education
Higher Education Reform Ministry Of Education
 
2016 ICSAN MCPE Understanding the Financial Reporting Council (FRC)
2016 ICSAN MCPE Understanding the Financial Reporting Council (FRC)2016 ICSAN MCPE Understanding the Financial Reporting Council (FRC)
2016 ICSAN MCPE Understanding the Financial Reporting Council (FRC)
 
Lawrence Kiguro: Climate change response initiatives by World Vision Kenya #B...
Lawrence Kiguro: Climate change response initiatives by World Vision Kenya #B...Lawrence Kiguro: Climate change response initiatives by World Vision Kenya #B...
Lawrence Kiguro: Climate change response initiatives by World Vision Kenya #B...
 
Mooc activity @university of johannesburg
Mooc activity @university of johannesburgMooc activity @university of johannesburg
Mooc activity @university of johannesburg
 
University of Johannesburg Orange Carpet Rewards Programme
University of Johannesburg Orange Carpet Rewards ProgrammeUniversity of Johannesburg Orange Carpet Rewards Programme
University of Johannesburg Orange Carpet Rewards Programme
 

Similar to Fiscal Council opinion on the Summer Forecast 2014 of the Ministry of Finance

Demographic Change and Expenditure Pressures in Ireland
Demographic Change and Expenditure Pressures in IrelandDemographic Change and Expenditure Pressures in Ireland
Demographic Change and Expenditure Pressures in IrelandDaragh McCarthy
 
Budgeting in Croatia - Ivana JAKIR BAJO, Croatia
Budgeting in Croatia - Ivana JAKIR BAJO, CroatiaBudgeting in Croatia - Ivana JAKIR BAJO, Croatia
Budgeting in Croatia - Ivana JAKIR BAJO, CroatiaOECD Governance
 
Budget process government spending
Budget process government spendingBudget process government spending
Budget process government spendingSABC News
 
Joaquim Levy - Brazil 2015 Outlook
Joaquim Levy - Brazil 2015 OutlookJoaquim Levy - Brazil 2015 Outlook
Joaquim Levy - Brazil 2015 OutlookDenizecomZ
 
PPT da Palestra do ministro Joaquim Levy em Nova Iorque
PPT da Palestra do ministro Joaquim Levy em Nova Iorque PPT da Palestra do ministro Joaquim Levy em Nova Iorque
PPT da Palestra do ministro Joaquim Levy em Nova Iorque portaldabetania
 
HeidelbergCement: Q1 2015 Presentation
HeidelbergCement: Q1 2015 PresentationHeidelbergCement: Q1 2015 Presentation
HeidelbergCement: Q1 2015 PresentationHeidelbergCement
 
The Norwegian fiscal framework and the management of petroleum wealth - Colin...
The Norwegian fiscal framework and the management of petroleum wealth - Colin...The Norwegian fiscal framework and the management of petroleum wealth - Colin...
The Norwegian fiscal framework and the management of petroleum wealth - Colin...OECD Governance
 
Six-Pack, Two-Pack and the Fiscal Compact
Six-Pack, Two-Pack and the Fiscal CompactSix-Pack, Two-Pack and the Fiscal Compact
Six-Pack, Two-Pack and the Fiscal Compacts.coffey
 
3. Eva Zamrazivola - Czech Republic
3. Eva Zamrazivola - Czech Republic3. Eva Zamrazivola - Czech Republic
3. Eva Zamrazivola - Czech RepublicOECD Governance
 
Budgeting in Bulgaria - Jungmin PARK, OECD
Budgeting in Bulgaria - Jungmin PARK, OECDBudgeting in Bulgaria - Jungmin PARK, OECD
Budgeting in Bulgaria - Jungmin PARK, OECDOECD Governance
 
Governor Olli Rehn: The Finnish economy in early summer 2020: The worst has n...
Governor Olli Rehn: The Finnish economy in early summer 2020: The worst has n...Governor Olli Rehn: The Finnish economy in early summer 2020: The worst has n...
Governor Olli Rehn: The Finnish economy in early summer 2020: The worst has n...Suomen Pankki
 
Latvia`s Macro Profile 2023
Latvia`s Macro Profile 2023Latvia`s Macro Profile 2023
Latvia`s Macro Profile 2023Latvijas Banka
 
The Continuing Constraints on Ireland's Public Finances
The Continuing Constraints on Ireland's Public FinancesThe Continuing Constraints on Ireland's Public Finances
The Continuing Constraints on Ireland's Public Financess.coffey
 
Budget 2016-17: Implications for Trade and Investment
Budget 2016-17: Implications for Trade and InvestmentBudget 2016-17: Implications for Trade and Investment
Budget 2016-17: Implications for Trade and InvestmentNIPFP Publications
 
DELSA/GOV 3rd Health meeting - Christian KASTROP
DELSA/GOV 3rd Health meeting - Christian KASTROPDELSA/GOV 3rd Health meeting - Christian KASTROP
DELSA/GOV 3rd Health meeting - Christian KASTROPOECD Governance
 
Eu funds-in-central-and-eastern-europe
Eu funds-in-central-and-eastern-europeEu funds-in-central-and-eastern-europe
Eu funds-in-central-and-eastern-europeAndrei Stepanov
 

Similar to Fiscal Council opinion on the Summer Forecast 2014 of the Ministry of Finance (20)

Demographic Change and Expenditure Pressures in Ireland
Demographic Change and Expenditure Pressures in IrelandDemographic Change and Expenditure Pressures in Ireland
Demographic Change and Expenditure Pressures in Ireland
 
Girol karacaoglu
Girol karacaogluGirol karacaoglu
Girol karacaoglu
 
Budgeting in Croatia - Ivana JAKIR BAJO, Croatia
Budgeting in Croatia - Ivana JAKIR BAJO, CroatiaBudgeting in Croatia - Ivana JAKIR BAJO, Croatia
Budgeting in Croatia - Ivana JAKIR BAJO, Croatia
 
Budget process government spending
Budget process government spendingBudget process government spending
Budget process government spending
 
Joaquim Levy - Brazil 2015 Outlook
Joaquim Levy - Brazil 2015 OutlookJoaquim Levy - Brazil 2015 Outlook
Joaquim Levy - Brazil 2015 Outlook
 
PPT da Palestra do ministro Joaquim Levy em Nova Iorque
PPT da Palestra do ministro Joaquim Levy em Nova Iorque PPT da Palestra do ministro Joaquim Levy em Nova Iorque
PPT da Palestra do ministro Joaquim Levy em Nova Iorque
 
HeidelbergCement: Q1 2015 Presentation
HeidelbergCement: Q1 2015 PresentationHeidelbergCement: Q1 2015 Presentation
HeidelbergCement: Q1 2015 Presentation
 
Interim economic outlook March 2015
Interim economic outlook March 2015Interim economic outlook March 2015
Interim economic outlook March 2015
 
The Norwegian fiscal framework and the management of petroleum wealth - Colin...
The Norwegian fiscal framework and the management of petroleum wealth - Colin...The Norwegian fiscal framework and the management of petroleum wealth - Colin...
The Norwegian fiscal framework and the management of petroleum wealth - Colin...
 
Six-Pack, Two-Pack and the Fiscal Compact
Six-Pack, Two-Pack and the Fiscal CompactSix-Pack, Two-Pack and the Fiscal Compact
Six-Pack, Two-Pack and the Fiscal Compact
 
3. Eva Zamrazivola - Czech Republic
3. Eva Zamrazivola - Czech Republic3. Eva Zamrazivola - Czech Republic
3. Eva Zamrazivola - Czech Republic
 
Budgeting in Bulgaria - Jungmin PARK, OECD
Budgeting in Bulgaria - Jungmin PARK, OECDBudgeting in Bulgaria - Jungmin PARK, OECD
Budgeting in Bulgaria - Jungmin PARK, OECD
 
Governor Olli Rehn: The Finnish economy in early summer 2020: The worst has n...
Governor Olli Rehn: The Finnish economy in early summer 2020: The worst has n...Governor Olli Rehn: The Finnish economy in early summer 2020: The worst has n...
Governor Olli Rehn: The Finnish economy in early summer 2020: The worst has n...
 
MNI Connect
MNI Connect MNI Connect
MNI Connect
 
Latvia`s Macro Profile 2023
Latvia`s Macro Profile 2023Latvia`s Macro Profile 2023
Latvia`s Macro Profile 2023
 
The Continuing Constraints on Ireland's Public Finances
The Continuing Constraints on Ireland's Public FinancesThe Continuing Constraints on Ireland's Public Finances
The Continuing Constraints on Ireland's Public Finances
 
Budget 2016-17: Implications for Trade and Investment
Budget 2016-17: Implications for Trade and InvestmentBudget 2016-17: Implications for Trade and Investment
Budget 2016-17: Implications for Trade and Investment
 
Bruegel annual meetings 6.9.2016 minister Rehn
Bruegel annual meetings 6.9.2016 minister RehnBruegel annual meetings 6.9.2016 minister Rehn
Bruegel annual meetings 6.9.2016 minister Rehn
 
DELSA/GOV 3rd Health meeting - Christian KASTROP
DELSA/GOV 3rd Health meeting - Christian KASTROPDELSA/GOV 3rd Health meeting - Christian KASTROP
DELSA/GOV 3rd Health meeting - Christian KASTROP
 
Eu funds-in-central-and-eastern-europe
Eu funds-in-central-and-eastern-europeEu funds-in-central-and-eastern-europe
Eu funds-in-central-and-eastern-europe
 

Recently uploaded

Lion One Corporate Presentation May 2024
Lion One Corporate Presentation May 2024Lion One Corporate Presentation May 2024
Lion One Corporate Presentation May 2024Adnet Communications
 
Strategic Resources May 2024 Corporate Presentation
Strategic Resources May 2024 Corporate PresentationStrategic Resources May 2024 Corporate Presentation
Strategic Resources May 2024 Corporate PresentationAdnet Communications
 
CBD Belapur((Thane)) Charming Call Girls📞❤9833754194 Kamothe Beautiful Call G...
CBD Belapur((Thane)) Charming Call Girls📞❤9833754194 Kamothe Beautiful Call G...CBD Belapur((Thane)) Charming Call Girls📞❤9833754194 Kamothe Beautiful Call G...
CBD Belapur((Thane)) Charming Call Girls📞❤9833754194 Kamothe Beautiful Call G...priyasharma62062
 
Vip Call Girls Bhubaneswar😉 Bhubaneswar 9777949614 Housewife Call Girls Serv...
Vip Call Girls Bhubaneswar😉  Bhubaneswar 9777949614 Housewife Call Girls Serv...Vip Call Girls Bhubaneswar😉  Bhubaneswar 9777949614 Housewife Call Girls Serv...
Vip Call Girls Bhubaneswar😉 Bhubaneswar 9777949614 Housewife Call Girls Serv...Call Girls Mumbai
 
Escorts Indore Call Girls-9155612368-Vijay Nagar Decent Fantastic Call Girls ...
Escorts Indore Call Girls-9155612368-Vijay Nagar Decent Fantastic Call Girls ...Escorts Indore Call Girls-9155612368-Vijay Nagar Decent Fantastic Call Girls ...
Escorts Indore Call Girls-9155612368-Vijay Nagar Decent Fantastic Call Girls ...sanakhan51485
 
GIFT City Overview India's Gateway to Global Finance
GIFT City Overview  India's Gateway to Global FinanceGIFT City Overview  India's Gateway to Global Finance
GIFT City Overview India's Gateway to Global FinanceGaurav Kanudawala
 
2999,Vashi Fantastic Ellete Call Girls📞📞9833754194 CBD Belapur Genuine Call G...
2999,Vashi Fantastic Ellete Call Girls📞📞9833754194 CBD Belapur Genuine Call G...2999,Vashi Fantastic Ellete Call Girls📞📞9833754194 CBD Belapur Genuine Call G...
2999,Vashi Fantastic Ellete Call Girls📞📞9833754194 CBD Belapur Genuine Call G...priyasharma62062
 
Call Girls In Kolkata-📞7033799463-Independent Escorts Services In Dam Dam Air...
Call Girls In Kolkata-📞7033799463-Independent Escorts Services In Dam Dam Air...Call Girls In Kolkata-📞7033799463-Independent Escorts Services In Dam Dam Air...
Call Girls In Kolkata-📞7033799463-Independent Escorts Services In Dam Dam Air...rakulpreet584566
 
✂️ 👅 Independent Lucknow Escorts U.P Call Girls With Room Lucknow Call Girls ...
✂️ 👅 Independent Lucknow Escorts U.P Call Girls With Room Lucknow Call Girls ...✂️ 👅 Independent Lucknow Escorts U.P Call Girls With Room Lucknow Call Girls ...
✂️ 👅 Independent Lucknow Escorts U.P Call Girls With Room Lucknow Call Girls ...jabtakhaidam7
 
cost-volume-profit analysis.ppt(managerial accounting).pptx
cost-volume-profit analysis.ppt(managerial accounting).pptxcost-volume-profit analysis.ppt(managerial accounting).pptx
cost-volume-profit analysis.ppt(managerial accounting).pptxazadalisthp2020i
 
Premium Call Girls Bangalore Call Girls Service Just Call 🍑👄6378878445 🍑👄 Top...
Premium Call Girls Bangalore Call Girls Service Just Call 🍑👄6378878445 🍑👄 Top...Premium Call Girls Bangalore Call Girls Service Just Call 🍑👄6378878445 🍑👄 Top...
Premium Call Girls Bangalore Call Girls Service Just Call 🍑👄6378878445 🍑👄 Top...vershagrag
 
Q1 2024 Conference Call Presentation vF.pdf
Q1 2024 Conference Call Presentation vF.pdfQ1 2024 Conference Call Presentation vF.pdf
Q1 2024 Conference Call Presentation vF.pdfAdnet Communications
 
Technology industry / Finnish economic outlook
Technology industry / Finnish economic outlookTechnology industry / Finnish economic outlook
Technology industry / Finnish economic outlookTechFinland
 
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...Henry Tapper
 
Webinar on E-Invoicing for Fintech Belgium
Webinar on E-Invoicing for Fintech BelgiumWebinar on E-Invoicing for Fintech Belgium
Webinar on E-Invoicing for Fintech BelgiumFinTech Belgium
 
Garia ^ (Call Girls) in Kolkata - Book 8005736733 Call Girls Available 24 Hou...
Garia ^ (Call Girls) in Kolkata - Book 8005736733 Call Girls Available 24 Hou...Garia ^ (Call Girls) in Kolkata - Book 8005736733 Call Girls Available 24 Hou...
Garia ^ (Call Girls) in Kolkata - Book 8005736733 Call Girls Available 24 Hou...HyderabadDolls
 
Kurla Capable Call Girls ,07506202331, Sion Affordable Call Girls
Kurla Capable Call Girls ,07506202331, Sion Affordable Call GirlsKurla Capable Call Girls ,07506202331, Sion Affordable Call Girls
Kurla Capable Call Girls ,07506202331, Sion Affordable Call GirlsPriya Reddy
 
Bhubaneswar🌹Ravi Tailkes ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...
Bhubaneswar🌹Ravi Tailkes  ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...Bhubaneswar🌹Ravi Tailkes  ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...
Bhubaneswar🌹Ravi Tailkes ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...Call Girls Mumbai
 
Indore City REd Light Area Call Girls-✔✔9155612368 Escorts In Indore Female E...
Indore City REd Light Area Call Girls-✔✔9155612368 Escorts In Indore Female E...Indore City REd Light Area Call Girls-✔✔9155612368 Escorts In Indore Female E...
Indore City REd Light Area Call Girls-✔✔9155612368 Escorts In Indore Female E...sanakhan51485
 

Recently uploaded (20)

Lion One Corporate Presentation May 2024
Lion One Corporate Presentation May 2024Lion One Corporate Presentation May 2024
Lion One Corporate Presentation May 2024
 
Strategic Resources May 2024 Corporate Presentation
Strategic Resources May 2024 Corporate PresentationStrategic Resources May 2024 Corporate Presentation
Strategic Resources May 2024 Corporate Presentation
 
CBD Belapur((Thane)) Charming Call Girls📞❤9833754194 Kamothe Beautiful Call G...
CBD Belapur((Thane)) Charming Call Girls📞❤9833754194 Kamothe Beautiful Call G...CBD Belapur((Thane)) Charming Call Girls📞❤9833754194 Kamothe Beautiful Call G...
CBD Belapur((Thane)) Charming Call Girls📞❤9833754194 Kamothe Beautiful Call G...
 
Vip Call Girls Bhubaneswar😉 Bhubaneswar 9777949614 Housewife Call Girls Serv...
Vip Call Girls Bhubaneswar😉  Bhubaneswar 9777949614 Housewife Call Girls Serv...Vip Call Girls Bhubaneswar😉  Bhubaneswar 9777949614 Housewife Call Girls Serv...
Vip Call Girls Bhubaneswar😉 Bhubaneswar 9777949614 Housewife Call Girls Serv...
 
Escorts Indore Call Girls-9155612368-Vijay Nagar Decent Fantastic Call Girls ...
Escorts Indore Call Girls-9155612368-Vijay Nagar Decent Fantastic Call Girls ...Escorts Indore Call Girls-9155612368-Vijay Nagar Decent Fantastic Call Girls ...
Escorts Indore Call Girls-9155612368-Vijay Nagar Decent Fantastic Call Girls ...
 
GIFT City Overview India's Gateway to Global Finance
GIFT City Overview  India's Gateway to Global FinanceGIFT City Overview  India's Gateway to Global Finance
GIFT City Overview India's Gateway to Global Finance
 
2999,Vashi Fantastic Ellete Call Girls📞📞9833754194 CBD Belapur Genuine Call G...
2999,Vashi Fantastic Ellete Call Girls📞📞9833754194 CBD Belapur Genuine Call G...2999,Vashi Fantastic Ellete Call Girls📞📞9833754194 CBD Belapur Genuine Call G...
2999,Vashi Fantastic Ellete Call Girls📞📞9833754194 CBD Belapur Genuine Call G...
 
Call Girls In Kolkata-📞7033799463-Independent Escorts Services In Dam Dam Air...
Call Girls In Kolkata-📞7033799463-Independent Escorts Services In Dam Dam Air...Call Girls In Kolkata-📞7033799463-Independent Escorts Services In Dam Dam Air...
Call Girls In Kolkata-📞7033799463-Independent Escorts Services In Dam Dam Air...
 
✂️ 👅 Independent Lucknow Escorts U.P Call Girls With Room Lucknow Call Girls ...
✂️ 👅 Independent Lucknow Escorts U.P Call Girls With Room Lucknow Call Girls ...✂️ 👅 Independent Lucknow Escorts U.P Call Girls With Room Lucknow Call Girls ...
✂️ 👅 Independent Lucknow Escorts U.P Call Girls With Room Lucknow Call Girls ...
 
Call Girls in Yamuna Vihar (delhi) call me [🔝9953056974🔝] escort service 24X7
Call Girls in  Yamuna Vihar  (delhi) call me [🔝9953056974🔝] escort service 24X7Call Girls in  Yamuna Vihar  (delhi) call me [🔝9953056974🔝] escort service 24X7
Call Girls in Yamuna Vihar (delhi) call me [🔝9953056974🔝] escort service 24X7
 
cost-volume-profit analysis.ppt(managerial accounting).pptx
cost-volume-profit analysis.ppt(managerial accounting).pptxcost-volume-profit analysis.ppt(managerial accounting).pptx
cost-volume-profit analysis.ppt(managerial accounting).pptx
 
Premium Call Girls Bangalore Call Girls Service Just Call 🍑👄6378878445 🍑👄 Top...
Premium Call Girls Bangalore Call Girls Service Just Call 🍑👄6378878445 🍑👄 Top...Premium Call Girls Bangalore Call Girls Service Just Call 🍑👄6378878445 🍑👄 Top...
Premium Call Girls Bangalore Call Girls Service Just Call 🍑👄6378878445 🍑👄 Top...
 
Q1 2024 Conference Call Presentation vF.pdf
Q1 2024 Conference Call Presentation vF.pdfQ1 2024 Conference Call Presentation vF.pdf
Q1 2024 Conference Call Presentation vF.pdf
 
Technology industry / Finnish economic outlook
Technology industry / Finnish economic outlookTechnology industry / Finnish economic outlook
Technology industry / Finnish economic outlook
 
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
 
Webinar on E-Invoicing for Fintech Belgium
Webinar on E-Invoicing for Fintech BelgiumWebinar on E-Invoicing for Fintech Belgium
Webinar on E-Invoicing for Fintech Belgium
 
Garia ^ (Call Girls) in Kolkata - Book 8005736733 Call Girls Available 24 Hou...
Garia ^ (Call Girls) in Kolkata - Book 8005736733 Call Girls Available 24 Hou...Garia ^ (Call Girls) in Kolkata - Book 8005736733 Call Girls Available 24 Hou...
Garia ^ (Call Girls) in Kolkata - Book 8005736733 Call Girls Available 24 Hou...
 
Kurla Capable Call Girls ,07506202331, Sion Affordable Call Girls
Kurla Capable Call Girls ,07506202331, Sion Affordable Call GirlsKurla Capable Call Girls ,07506202331, Sion Affordable Call Girls
Kurla Capable Call Girls ,07506202331, Sion Affordable Call Girls
 
Bhubaneswar🌹Ravi Tailkes ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...
Bhubaneswar🌹Ravi Tailkes  ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...Bhubaneswar🌹Ravi Tailkes  ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...
Bhubaneswar🌹Ravi Tailkes ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...
 
Indore City REd Light Area Call Girls-✔✔9155612368 Escorts In Indore Female E...
Indore City REd Light Area Call Girls-✔✔9155612368 Escorts In Indore Female E...Indore City REd Light Area Call Girls-✔✔9155612368 Escorts In Indore Female E...
Indore City REd Light Area Call Girls-✔✔9155612368 Escorts In Indore Female E...
 

Fiscal Council opinion on the Summer Forecast 2014 of the Ministry of Finance

  • 1. Fiscal Council Opinion on the Summer Forecast 2014 of the Ministry of Finance Raul Eamets Chairman of Fiscal Council Tallinn, 15 September 2014
  • 2. This presentation 1) about the Fiscal Council 2) definition of terms 3) the summer forecast of the Ministry of Finance in brief 4) the opinion of the Fiscal Council 5) questions and interviews
  • 3. The Fiscal Council • set up in 2014 as an independent advisory body charged with assessing Estonian fiscal policy • issues opinions on the forecasts for the macro and fiscal forecasts and on the budget strategy and how the goals of the structural budget position of the general government are being achieved • meets whenever necessary, but at least five times a year • the opinions of the Fiscal Council are published on its website www.eelarvenoukogu.ee • members: Raul Eamets, Andrus Alber, Ülo Kaasik, Martti Randveer, Urmas Varblane and Andres Võrk
  • 4. Definitions • output gap – the difference between actual and potential GDP • cyclical budget component – the impact of the business cycle on the budget balance • cyclically adjusted budget balance – the nominal general government budget balance adjusted with the cyclical component • one-off factors – revenues or expenditure that are clearly temporary in nature and that do not affect the long-term sustainability of the general government budget, such as income from CO2 quota sales • structural budget balance – the cyclically adjusted budget balance of the general government with the effect of one-off factors removed
  • 5. Output gap GDP time negative gap potential GDP positive gap actual GDP - + - + ?
  • 6. Key Figures for the Economic Forecast for Summer 2014 • the changes from the spring are reasonable and are mainly due to weak external demand • the forecast is an appropriate base for setting fiscal policy but it should be remembered that the external environment may remain volatile for some time yet MACRO FORECAST summer forecast spring forecast KEY FIGURES 2014 2015 2014 2015 Real GDP growth (%) 0.5 2.5 2.0 3.5 Nominal GDP growth (%) 3.0 5.8 4.9 6.9 Change in employment (%) 0.1 0.0 0.2 0.3 Nominal wage growth (%) 6.0 6.1 6.2 6.3 Domestic demand growth (%) 2.2 3.3 2.8 3.7 Real growth in exports of goods 2.0 3.5 2.4 6.0 and services (%)
  • 7. • the forecast of the Ministry of Finance is quite conservative compared to others • it should be assessed using information that was available at the time (data were adjusted after the forecast was published) Forecasts for real GDP growth in Estonia (%) Sources: Consensus Forecasts, Eesti Pank, European Commission, OECD, Ministry of Finance, International Monetary Fund, Swedbank 0 1 2 3 4 OECD (May) European Commission (May) International Monetary Fund (May) Eesti Pank (June) Swedbank (August) Consensus Forecasts (August) Ministry of Finance (September) 2015 2014
  • 8. Forecasts of Estonia’s economic growth for 2014 Source: Ministry of Finance 5 4 3 2 1 0 y-o-y % MofF EP EC IMF OECD Swed SEB Nordea Consensus Forecast 2011 4 7 10 2012 4 7 10 2013 4 7 10 2014 4 7
  • 9. • nominal GDP growth and GDP structure should be considered as well as real GDP growth • wages are increasing strongly Nominal wage growth (%) Nominal GDP growth (%) 2014 2015 2014 2015 Ministry of Finance summer forecast 6.0 6.1 3.0 5.8 IMF 7.4 7.2 6.6 8.1 Eesti Pank 6.0 6.2 4.1 6.6 European Commission 6.0 6.7 4.7 6.6 OECD 3.2 5.3
  • 10. • the government has made tax collection from direct taxes significantly more efficient The nominal budget position for 2014-2015 has changed little since the spring MAKE-UP OF THE GENERAL GOVERNMENT POSITION Summer forecast State Budget Strategy 2015–2018 2014 2015 2014 2015 General government total (million euros) -38 -90 -135 -111 state budget 1 -47 -82 -56 other central government -45 -42 -52 -48 social security funds 35 37 35 28 local government -29 -38 -36 -35
  • 11. The nominal position of the general government is improving faster than was forecast in spring • the effect of tax policy is clear in the forecast • but it is not clear whether the improvement assumes changes in spending policy FISCAL POSITION FORECAST 2014 2015 2016 2017 2018 Nominal position (million euros) summer forecast -38 -90 9 77 204 state budget strategy 2015–2018 -135 -111 -78 13 136 Nominal position (% of GDP) summer forecast -0.2 -0.5 0.0 0.3 0.8 state budget strategy 2015–2018 -0.7 -0.5 -0.4 0.1 0.5
  • 12. • estimating the structural budget position (including the output gap and the cyclical component) is methodologically complex and can lead to debate • most methods used overlook the impact on tax revenues of changes in GDP structure Estimates of the output gap for Estonia (% of potential GDP) Sources: European Commission, OECD, IMF, Ministry of Finance 2 1 0 -1 -2 -3 -4 European Commission OECD IMF Ministry of Finance 2013 2014 2015 2016 2017 2018
  • 13. • the output gap will probably be negative for 2014-2015 but the main tax bases, including private consumption and the payroll may be higher than their potential and have a positive gap • separate assessment of the tax bases gives important additional information about the structural position of the budget, while estimates are also affected by revisions of GDP data Estimates of the cyclical component of the budget (% of GDP) Sources: Ministry of Finance, Fiscal Council 0.4 0.2 0.0 -0.2 -0.4 -0.6 -0.8 -1.0 2013 2014 2015 Ministry of Finance estimate using output gap (summer forecast) Fiscal Council estimate using output gap (old time series) Fiscal Council estimate using output gap (new time series) Fiscal Council estimate using disaggregated approach
  • 14. The forecast structural fiscal position is strong, but… • there is a serious risk that the structural fiscal position is estimated higher than it actually is • the Fiscal Council recommends that the planned structural surplus for 2015 should be no smaller than the 0.8% of GDP put forward in the summer forecast MAKE-UP OF THE STRUCTURAL POSITION Summer forecast State Budget Strategy 2015–2018 2014 2015 2014 2015 nominal position (% of GDP) -0.2 -0.5 -0.7 -0.5 cyclical component (% of GDP) -0.9 -0.7 -0.5 -0.2 cyclically adjusted position (% of GDP) 0.7 0.3 -0.2 -0.3 one-off factors (% of GDP) -0.2 -0.5 -0.3 -0.5 structural position (% of GDP) 0.9 0.8 0.1 0.2
  • 15. Main message from the Fiscal Council • the new macro forecast is an appropriate basis to use for drafting the state budget • the Fiscal Council finds that the summer fiscal forecast by the Ministry of Finance contains too little information on spending • various factors such as the changing structure of GDP or revisions to the GDP time series mean that the risks in measuring the structural fiscal position are larger than usual • the output gap will probably be negative for 2014-2015 but the main tax bases may be higher than their potential • the structural fiscal position for 2014-2015 may have been overestimated • the structural surplus for the general government budget should not be smaller than the 0.8% of GDP noted in the summer forecast
  • 16. Contacts for the Fiscal Council Chairman Raul Eamets raul.eamets@ut.ee 514 0082 Secretary to the Fiscal Council info@eelarvenoukogu.ee www.eelarvenoukogu.ee