Fiscal rules
Fiscal rules set restrictions on fiscal policy so as to strengthen the budget discipline, improve the coordination between various levels of authority and reduce the uncertainty in terms of future fiscal policy. They are set by the Budget System Law.
General fiscal rules determine medium-term fiscal deficit target and the maximum debt-to-GDP ratio. General fiscal rules set medium-term annual fiscal deficit target at 1% of GDP. So as to ensure anti-cyclical fiscal policy, there is a formula for the calculation of fiscal deficit. The formula depends on the fiscal deficit in the year prior to the relevant one, deficit target and the real and potential GDP growth rates. The other fiscal rule stipulates that the general government debt, excluding the liabilities arising from restitution, will not exceed 45% of GDP.
Specific fiscal rules ensure that the reduction of fiscal deficit to GDP is mainly achieved through the reduction of public expenditure. In addition, the objective of specific fiscal rules is to change the public expenditure structure through the reduction of current expenditure and through a greater scale of public investments. These rules set the percentage increase of individual salaries in the public sector and pensions. The percentage increase will be harmonized every April and October up to 2015, depending on consumer prices growth and real GDP growth rate. The fiscal rules which set pension and salary trends will be applied even after 2015, until the pension and salary share in GDP reach 10% and 8% respectively.
