The five-year Statement of Fiscal Policy and Fiscal Strategy Plan for the public sector, presented before Parliament today, entail that it will be possible in coming years to prepare even better for the well-being of coming generations by paying down public debt, reducing levies on individuals with lower and fairer taxes, building up social infrastructure, and significantly strengthening core government services with increased contributions, a stronger healthcare system, and enhanced quality of education.
The Statement of Fiscal Policy is presented on the basis of new legislation on public sector finances. It provides for general objectives concerning developments in public sector finances – i.e., the state and the local authorities – while a more detailed description of the objectives of the policy can be found in the Fiscal Strategy Plan. With this, an important step is taken towards strengthening the fiscal framework and introducing greater integration and discipline in planning for the public sector, with emphasis on long-term economic stability.
The Act on Public Sector Finances implements stringent rules on operational performance and developments in the debt level. According to the plan, these objectives will be achieved during the first two years of the plan, with a positive overall balance for the entire five-year period and a reduction in gross general government debt to 30% of GDP. The overall balance of the general government will be positive by at least 1% of GDP during the horizon of the plan, in order to maintain economic stability. In 2017, the central government primary balance is expected to be positive by ISK 26.5 billion.
