The government determined the text of amendments to the Decree on the framework for the preparation of general government budgets for the period from 2020 to 2022 in the part relating to 2021. The amendments are necessary for further smooth financing of measures to combat the epidemic adopted after the adoption of budget amendments for the year 2021.
Following the adoption of the amendments to the budget for 2021, two more laws were adopted, namely the Act on intervention measures to assist the economy and tourism in mitigating the consequences of the COVID-19 epidemic and the Act on emergency measures in the field of health. Both are related to measures to mitigate the effects of COVID-19 and additional measures to urgently support the initial recovery.
Favourable macroeconomic forecasts have a positive impact on general government revenue and, consequently, on the general government balance, but further action is needed, as the full impact of the health crisis on the economy cannot yet be accurately assessed. The ongoing economic recovery should also be encouraged and it is important not to deviate from the announced dynamics of the implementation of investment projects included in the adopted budget for 2021, as it could have a negative impact on the economy, population and recovery. The Exceptional Circumstance was also enforced by the European Commission in 2022.
For the above reasons, the proposed amendment to the decree increases the maximum volume of expenditure and the target balance of the state budget, and consequently also the maximum volume of expenditure and the target balance of the general government sector for 2021.
The general government expenditure ceiling will increase to 25.80 billion euros and the deficit will fall to 7.5% of GDP. In terms of cash flow, the allowable ceiling on state budget expenditure will increase to 14.99 billion euros in 2021, and the deficit will fall to 7.9% of GDP.