Compliance with the structural balance rule in 2015 and 2016 - Avril 2016

In accordance with the provisions of the 12 July 2014 law, the CNFP has assessed compliance with the structural balance rule on the basis of the figures transmitted to the European Commission (Eurostat) in the so-called “EDP notifications”.

These EDP notifications are submitted by the Government/STATEC on 1 April and 1 October of each year and it is on the basis of those figures that the CNFP is called to assess whether the structural balance is complied with or whether there is a ‘significant deviation’ triggering the automatic correction mechanism.

For 2015, the CNFP comes to a preliminary conclusion that the structural balance rule is complied with, irrespective of the two methodologies used to compute the output gap (i.e. the HP filtering method and common EU methodology).

For 2016, the analysis leads to two different outcomes depending on the methodology. The nominal balance published in the context of the April 2016 EDP notification however appears to be under-estimated. An appropriate upward revision of the figures, notably taking into account the much improved baseline for 2015, would lead to a structural balance in full compliance with the MTO of +0.5% of GDP on an ex ante basis, irrespective of the methodology used.

In order to ensure a realistic starting point for the upcoming medium-term fiscal path, which should notably integrate the effects of the 2017 tax reform, the CNFP believes that the 2016 nominal figures would need to be revised upwards already in the context of the stability programme.

A more detailed assessment (in French only) can be downloaded through the link below.

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