Not even zero deficit will help budget sustainability

After capping the retirement age, not even the government-declared balanced budget over the next three years would be sufficient to achieve the long-term sustainability of public finances, wrote the Council for Budgetary Responsibility (RRZ) in its assessment of the medium-term budgetary objectives for 2019-2022. According to Council Chairman Ivan Šramko, additional measures worth 1.3% of gross domestic product (GDP) would have to be adopted beyond the set goals of the government in order to achieve sustainability, taking into account the capping of the retirement age. "Adopting the necessary measures now would create fiscal space through debt reduction to absorb the costs of ageing, thereby spreading these costs more evenly over time without having a significant negative impact on the living standard of present and future generations," said Šramko. The Budgetary Council notes further that the government has worsened its medium-term budgetary objective for the coming years to the lowest permissible threshold for euro area members.