the sustainability of public finances in slovenia: medium- and long-term challenges
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The sustainability of public finances in Slovenia: medium- and long-term challenges. Per Eckefeldt European Commission Ljubljana, 8 July 2014 The views expressed herein are those of the individual authors and do not necessarily reflect the views of the European Commission. - PowerPoint PPT PresentationTRANSCRIPT
The sustainability of public finances in Slovenia:
medium- and long-term challenges
Per EckefeldtEuropean Commission
Ljubljana, 8 July 2014The views expressed herein are those of the individual authors and do not necessarily reflect
the views of the European Commission.
Short-term risk for fiscal crisis (S0 indicator and market perceptions)
2
Financial market information
Underlying macro-fiscal assumptions
Macro-fiscal as sumptions, Slovenia2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Primary balance -1.7 -0.6 -0.1 0.0 0.0 0.1 0.0 0.0 0.0 -0.1 -0.3 -0.5Structural primary balance -0.3 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6Real GDP grow th -1.1 0.8 1.4 1.2 1.3 1.4 1.0 1.1 1.3 1.4 1.5 1.5Potential GDP grow th -0.6 0.0 0.5 0.7 0.8 0.9 1.0 1.1 1.3 1.4 1.5 1.5Inflation rate 1.0 0.9 1.3 1.6 1.8 2.0 2.0 2.0 2.0 2.0 2.0 2.0Implicit interest rate (nominal) 4.8 4.2 3.8 3.1 2.9 2.7 2.5 2.4 2.1 2.2 2.4 2.8
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Primary balance -1.7 -0.9 0.0 0.7 1.3 2.0 2.0 1.9 1.5 1.5 1.6 1.8Structural primary balance -0.3 0.2 0.7 1.3 1.9 2.5 2.6 2.5 2.2 2.2 2.5 2.9Real GDP grow th -1.1 0.9 1.2 0.9 1.0 1.1 1.0 1.2 1.4 1.4 1.4 1.3Potential GDP grow th -0.6 0.2 0.3 0.4 0.5 0.6 1.0 1.2 1.4 1.4 1.4 1.3Inflation rate 1.0 0.9 1.3 1.6 1.8 2.0 2.0 2.0 2.0 2.0 2.0 2.0Implicit interest rate (nominal) 4.8 4.2 3.7 3.1 3.0 2.8 2.6 2.5 2.1 2.2 2.4 2.9
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Primary balance -1.8 0.2 0.9 1.8 2.4 3.3 2.5 2.5 2.5 2.4 2.2 2.1Structural primary balance -0.4 1.2 1.7 2.2 2.2 2.6 2.6 2.6 2.6 2.6 2.6 2.6Real GDP grow th -1.1 0.5 0.7 1.3 1.7 1.7 1.0 1.1 1.3 1.4 1.5 1.5Potential GDP grow th -1.0 -0.2 0.2 0.5 0.6 0.7 1.0 1.1 1.3 1.4 1.5 1.5Inflation rate 1.0 0.5 1.0 1.4 1.4 1.5 2.0 2.0 2.0 2.0 2.0 2.0Implicit interest rate (nominal) 4.8 4.9 4.2 4.1 4.1 4.1 4.0 3.9 3.5 3.4 3.5 3.6
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Primary balance -1.7 -0.6 -0.1 -0.8 -1.6 -2.3 -2.3 -2.4 -2.4 -2.5 -2.7 -2.8Structural primary balance -0.3 0.5 0.6 -0.2 -1.0 -1.8 -1.8 -1.8 -1.8 -1.8 -1.8 -1.8Real GDP grow th -1.1 0.8 1.4 1.6 1.7 1.8 1.0 1.1 1.3 1.4 1.5 1.5
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Primary balance -1.7 -0.6 -0.1 -0.8 -1.6 -2.3 -2.3 -2.4 -2.4 -2.5 -2.7 -2.8Structural primary balance -0.3 0.5 0.6 -0.2 -1.0 -1.8 -1.8 -1.8 -1.8 -1.8 -1.8 -1.8Real GDP grow th -1.1 0.8 1.4 1.8 1.9 1.9 1.5 1.5 1.5 1.5 1.5 1.5Implicit interest rate (nominal) 4.8 4.2 3.8 3.3 3.2 3.4 3.6 3.7 4.2 4.4 4.5 4.7
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Implicit interest rate (nominal) 4.8 4.4 4.0 3.4 3.2 3.0 2.8 2.7 2.6 2.8 3.0 3.6
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Implicit interest rate (nominal) 4.8 4.0 3.5 2.9 2.7 2.5 2.2 2.1 1.6 1.6 1.7 2.1
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Implicit interest rate (nominal) 4.8 4.6 4.2 3.6 3.4 3.2 3.0 2.9 2.8 2.9 3.1 3.7
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Real GDP grow th -1.1 1.3 1.9 1.7 1.8 1.9 1.5 1.6 1.8 1.9 2.0 2.0Potential GDP grow th -0.6 0.5 1.0 1.2 1.3 1.4 1.5 1.6 1.8 1.9 2.0 2.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Real GDP grow th -1.1 0.3 0.9 0.7 0.8 0.9 0.5 0.6 0.8 0.9 1.0 1.0Potential GDP grow th -0.6 -0.5 0.0 0.2 0.3 0.4 0.5 0.6 0.8 0.9 1.0 1.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Real GDP grow th -1.1 2.4 3.0 1.7 1.8 1.9 1.5 1.6 1.8 1.9 2.0 2.0Potential GDP grow th -0.6 1.6 2.1 1.2 1.3 1.4 1.5 1.6 1.8 1.9 2.0 2.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Real GDP grow th -1.1 -0.9 -0.2 0.7 0.8 0.9 0.5 0.6 0.8 0.9 1.0 1.0Potential GDP grow th -0.6 -1.6 -1.2 0.2 0.3 0.4 0.5 0.6 0.8 0.9 1.0 1.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Inflation rate 1.0 1.4 1.8 2.1 2.3 2.5 2.5 2.5 2.5 2.5 2.5 2.5
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Inflation rate 1.0 0.4 0.8 1.1 1.3 1.5 1.5 1.5 1.5 1.5 1.5 1.5
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Primary balance 1.7 1.2 0.6 0.5 0.4 0.4 0.4 0.5 0.5 0.6 0.8 0.9Structural primary balance -0.3 -0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1Real GDP grow th -1.1 1.0 1.3 1.2 1.3 1.4 1.0 1.1 1.3 1.4 1.5 1.5Potential GDP grow th -0.6 0.3 0.4 0.7 0.8 0.9 1.0 1.1 1.3 1.4 1.5 1.5
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Exchange rate depreciation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Implicit interest rate (nominal) 4.8 4.2 3.8 3.1 2.9 2.7 2.5 2.4 2.1 2.2 2.4 2.8
11. Higher growth scenario (enhanced DSA)
1. Base line no-policy change s cenario
2. SGP institutional sce nario
3. SCP scenario
4. His torical SPB scenario
5. Combine d histor ical s ce nario
6. Higher IR s cenario (standard DSA)
7. Lower IR s cenario
8. Higher IR s cenario (enhance d DSA)
9. Higher growth sce nario (s tandard DSA)
10. Low er growth scenario (standard DSA)
12. Low er growth scenario (enhanced DSA)
13. Higher inflation sce nario
14. Low er inflation sce nario
15. Low er SPB scenario
16. Exchange rate depreciation s cenario
long term s hort term long te rm s hort termBa1 Ba1A- A-2 A- A-2
BBB+ BBB+
Sovere ign Ratings as of May14, SI
Local currency Foreign currency
Moody'sS&PFitch
10-ye ar n.a.5-year 149CDS (bp)
Financial marke t information as of May 2014, SI
Sovereign yie ld spre ads (bp)*
2-year n.a.
Slovenia2009 2013
3
Short-term risk for fiscal crisis (S0 indicator) • Risks markedly reduced since 2009 in the EA countries and SI
High risk
Low risk
Gov’t debt prospects (1)Gov’t debt prospects (1)SI and EASI and EA
4
Risks related to the structure of public debt financing
Risks related to government's contingent liabilities
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Standardized (permanent) negative shock on the PB equal to 50% of the forecasted cumu lative change over the two forecast years
Sensitivity test on the exch ange rate
Baseline no-policy change scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018
(% of GDP) Stochastic debt projections 2014-18, SI
p10_p20 p20_p40p40_p60 p60_p80 p80_p90p50 gdebt_gdp_DSM
-05
00
05
10
15
20
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Annual change in gross debt ratio, baseline scenario - SI
Stock flow adjustments Inflation effect Growth effect (real)
Interest expenditure Primary deficit Change in gross public sector debt
% of GDP
00
10
20
30
40
50
60
70
80
90
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Debt maturity structure (as % of GDP), baseline scenario - SI
New long-term debt New short-term debt Rolled-over long-term debtRolled-over short-term debt Outstanding (non maturing) debt
3.4 (2012) 62 17.2
Public debt structure - SI (2013):*
Change in share of short-term public debt (p.p.):
Share of public debt by non-residents (%):
Share of public debt in foreign currency (%):
2013SI EU
1, 16.8 (2012) 14.1 (2012)
: :
1.1 7.1
: :
Total
Liabilities and assets outside gen. gov't under guarantee 3
Contingent liabilities of gen. gov't related to support to f inancial institutions (% GDP)
2
Securities issued under liquidity schemes
Special purpose entity
1.1 :
Government's contingent liabilities -
State guarantees (% GDP)
bank recap. at 4.5% bank recap. at 8%-3 (2012) 154.8 (2011) 15.2 (2012) 3.4 (2012) -4.3 0.07% 0.34%
Change in nominal house price index:
PGovernment's contingent liability risks from banking sector - SI (2013):*
Bank loans-to-deposits ratio (%):
Probability of gov't cont. liabilities (>3% of GDP) linked to banking losses (SYMBOL):Private sector credit flow
(% GDP): Change in share of non-performing loans (p.p):
Share of non-performing loans (%):
Stochastic debt projections:
Rather stable baseline debt developments in SI while on a downward path in the EA, but with some uncertainty
Gov’t debt prospects (2)Gov’t debt prospects (2)SI and EASI and EA
5
Deterministic debt projections:
Risks much higher in both SI and the EA in the event of a return to the historically observed lower structural fiscal positions, and even more so in combination with historical interest (and growth) rates
SloveniaPublic debt projections under baseline and alternative scenarios and sensitivity tests
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Gross debt ratio 47.1 54.4 71.7 80.4 81.3 81.6 81.5 80.9 80.5 79.9 79.0 78.2 77.7 77.6
Changes in the ratio 8.3 7.3 17.4 8.7 0.9 0.3 -0.1 -0.6 -0.4 -0.6 -0.9 -0.8 -0.6 -0.1of which
(1) Primary balance 3.4 1.8 1.7 0.6 0.1 0.0 0.0 -0.1 0.0 0.0 0.0 0.1 0.3 0.5Structural primary balance (kept constant at 2015 lvl) 3.1 0.6 0.3 -0.5 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6Cycl ical component 0.4 1.2 1.4 1.1 0.7 0.5 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0Cost of ageing 0.0 0.0 0.0 0.0 0.0 0.1 0.3 0.5 0.6 0.6 0.6 0.6 0.9 1.0Others (taxes and property incomes) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1
(2) Snow ball effect 1.2 3.3 2.7 1.8 0.8 0.3 -0.1 -0.5 -0.4 -0.6 -0.9 -0.9 -0.9 -0.5Interest expenditure 1.9 2.2 2.6 3.0 2.9 2.5 2.3 2.1 2.0 1.9 1.6 1.7 1.8 2.1Growth effect -0.3 1.2 0.6 -0.5 -1.1 -0.9 -1.0 -1.1 -0.8 -0.9 -1.0 -1.1 -1.2 -1.2Inflation effect -0.4 -0.1 -0.5 -0.7 -1.0 -1.2 -1.4 -1.6 -1.6 -1.6 -1.5 -1.5 -1.5 -1.5
(3) Stock flow adjustment and one-off measures 3.7 2.2 13.0 6.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Per memoStructural deficit 5.0 2.7 2.5 2.5 2.4 2.0 2.1 2.1 2.0 1.9 1.7 1.8 2.1 2.6Notes: for primary balance, structural primary balance and structural deficit, a positive sign indicates a deficit in the table above.
SI - Debt projections baseline scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioNo-policy change scenario without ageing costsHistorical SPB scenarioCombined historical scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioStability and Growth Pact (SGP) institutional scenarioStability and Convergence Programme (SCP) scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenario
Standardized (permanent) negative shock (-1p .p.) to the sho rt- and long-term interest rates on newly issued and rolled over debt
Standardized (permanent) posit ive shock (+1p.p.) to the short- and long -term interest rates on newly issued and rolled over debt
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioStandardized (permanent) negative shock (-0.5p.p.) on GDP growthStandardized (permanent) posit ive shock (+0.5p.p.) on GDP growthStandardized (permanent) negative shock (-0.5p.p.) on infla tionStandardized (permanent) posit ive shock (+0.5p.p.) on inflation
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenario
Standardized (permanent) negative shock (-1p.p.) to the sho rt- and long-term interest rates on newly issued and rolled over debt
Enhanced (permanent) positive shock (+2p.p./+1p.p) to the sho rt- and long-term interest rates on newly issued and rolled over deb t
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioEnhanced (permanent) negati ve shock (-stdev(11-13)/-0.5p.p.) on GDP g rowthEnhanced (permanent) positive shock (+stdev(11-13)/+0.5p.p.) on GDP growthStandardized (permanent) negative shock (-0.5p.p.) on infla tionStandardized (permanent) positive shock (+0.5p.p.) on inflat ion
Gross public debt as % of GDP - SI (% of GDP) Stochastic debt projections 2014-18, SI
Gov’t debt prospects (3)Gov’t debt prospects (3)SI and EASI and EA
6
Deterministic debt projections: Risks relating to the fiscal starting point: necessary to sustain a primary surplus so as to keep gov’t debt levels in check in SI (in contrast with past experience)
Realism of baseline assumptions
Gov’t debt prospects (4)Gov’t debt prospects (4)SI and EASI and EA
7
Sensitivity analysis: introducing shocks to the key assumptions underpinning the baseline debt projections
SloveniaPublic debt projections under baseline and alternative scenarios and sensitivity tests
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Gross debt ratio 47.1 54.4 71.7 80.4 81.3 81.6 81.5 80.9 80.5 79.9 79.0 78.2 77.7 77.6
Changes in the ratio 8.3 7.3 17.4 8.7 0.9 0.3 -0.1 -0.6 -0.4 -0.6 -0.9 -0.8 -0.6 -0.1of which
(1) Primary balance 3.4 1.8 1.7 0.6 0.1 0.0 0.0 -0.1 0.0 0.0 0.0 0.1 0.3 0.5Structural primary balance (kept constant at 2015 lvl) 3.1 0.6 0.3 -0.5 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6Cyclical component 0.4 1.2 1.4 1.1 0.7 0.5 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0Cost of ageing 0.0 0.0 0.0 0.0 0.0 0.1 0.3 0.5 0.6 0.6 0.6 0.6 0.9 1.0Others (taxes and property incomes) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1
(2) Snow ball effect 1.2 3.3 2.7 1.8 0.8 0.3 -0.1 -0.5 -0.4 -0.6 -0.9 -0.9 -0.9 -0.5Interest expenditure 1.9 2.2 2.6 3.0 2.9 2.5 2.3 2.1 2.0 1.9 1.6 1.7 1.8 2.1Growth effect -0.3 1.2 0.6 -0.5 -1.1 -0.9 -1.0 -1.1 -0.8 -0.9 -1.0 -1.1 -1.2 -1.2Inflation effect -0.4 -0.1 -0.5 -0.7 -1.0 -1.2 -1.4 -1.6 -1.6 -1.6 -1.5 -1.5 -1.5 -1.5
(3) Stock flow adjustment and one-off measures 3.7 2.2 13.0 6.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Per memoStructural deficit 5.0 2.7 2.5 2.5 2.4 2.0 2.1 2.1 2.0 1.9 1.7 1.8 2.1 2.6Notes: for primary balance, structural primary balance and structural deficit, a positive sign indicates a deficit in the table above.
SI - Debt projections baseline scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioNo-policy change scenario without ageing costsHistorical SPB scenarioCombined historical scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioStabil ity and Growth Pact (SGP) institutional scenarioStabil ity and Convergence Programme (SCP) scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenario
Standardized (permanent) negative shock (-1p.p.) to the short- and long-term interest rates on newly issued and rolled over debt
Standardized (permanent) positive shock (+1p.p.) to the short- and long-term interest rates on newly issued and rolled over debt
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioStandardized (permanent) negative shock (-0.5p.p.) on GDP growthStandardized (permanent) positive shock (+0.5p.p.) on GDP growthStandardized (permanent) negative shock (-0.5p.p.) on in flationStandardized (permanent) positive shock (+0.5p.p.) on inflation
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenario
Standardized (permanent) negative shock (-1p.p.) to the short- and long-term interest rates on newly issued and rolled over debt
Enhanced (permanent) positive shock (+2p.p./+1p.p) to the short- and long-te rm interest rates on newly issued and rolled over debt
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioEnhanced (permanent) negative shock (-stdev(11-13) /-0.5p.p.) on GDP growthEnhanced (permanent) positive shock (+stdev(11-13)/+0.5p.p.) on GDP growthStanda rdized (permanent) negative shock (-0.5p.p.) on in flationStanda rdized (permanent) positive shock (+0.5p.p.) on inflation
Gross public debt as % of GDP - SI (% of GDP) Stochastic debt projections 2014-18, SI
Gov’t debt prospects (5)Gov’t debt prospects (5)SI and EASI and EA
8
Deterministic debt projections: policy scenariospolicy scenarios
Government debt very high in the SI and the EA, but: firstly, sticking to the EU fiscal rules (SGP); and, secondly, rigorously implementing the fiscal plans laid down in the 2014 SCPs would set it on a clear downward path (towards 60% of GDP)
SloveniaPublic debt projections under baseline and alternative scenarios and sensitivity tests
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Gross debt ratio 47.1 54.4 71.7 80.4 81.3 81.6 81.5 80.9 80.5 79.9 79.0 78.2 77.7 77.6
Changes in the ratio 8.3 7.3 17.4 8.7 0.9 0.3 -0.1 -0.6 -0.4 -0.6 -0.9 -0.8 -0.6 -0.1of which
(1) Primary balance 3.4 1.8 1.7 0.6 0.1 0.0 0.0 -0.1 0.0 0.0 0.0 0.1 0.3 0.5Structural primary balance (kept constant at 2015 lvl) 3.1 0.6 0.3 -0.5 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6Cyclical component 0.4 1.2 1.4 1.1 0.7 0.5 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0Cost of ageing 0.0 0.0 0.0 0.0 0.0 0.1 0.3 0.5 0.6 0.6 0.6 0.6 0.9 1.0Others (taxes and property incomes) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1
(2) Snowball effect 1.2 3.3 2.7 1.8 0.8 0.3 -0.1 -0.5 -0.4 -0.6 -0.9 -0.9 -0.9 -0.5Interest expenditure 1.9 2.2 2.6 3.0 2.9 2.5 2.3 2.1 2.0 1.9 1.6 1.7 1.8 2.1Growth effect -0.3 1.2 0.6 -0.5 -1.1 -0.9 -1.0 -1.1 -0.8 -0.9 -1.0 -1.1 -1.2 -1.2Inflation effect -0.4 -0.1 -0.5 -0.7 -1.0 -1.2 -1.4 -1.6 -1.6 -1.6 -1.5 -1.5 -1.5 -1.5
(3) Stock flow adjustment and one-off measures 3.7 2.2 13.0 6.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Per memoStructural def icit 5.0 2.7 2.5 2.5 2.4 2.0 2.1 2.1 2.0 1.9 1.7 1.8 2.1 2.6Notes: for primary balance, structural primary balance and structural deficit, a positive sign indicates a deficit in the table above.
SI - Debt projections baseline scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioNo-policy change scenario without ageing costsHistorical SPB scenarioCombined historical scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioStability and Growth Pact (SGP) institutional scenarioStability and Convergence Programme (SCP) scenario
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baselin e no-policy change scenario
Standardized (permanent) negative shock (-1p.p.) to the short- and long-term interest rates on newly issued and rolled over debt
Standardized (permanent) positive shock (+1p.p.) to the short- and long-term interest rates on newly issu ed a nd rolled over debt
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy chan ge scenarioStandardized (permanent) negative shock (-0.5p.p.) on GDP growthStandardized (permanent) positive shock (+0.5p.p.) on GDP growthStandardized (permanent) negative shock (-0.5p.p.) on in fla tionStandardized (permanent) positive shock (+0.5p.p.) on inflation
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenario
Standardized (permanent) negative shock (-1p.p.) to the short- and long-term interest rates on newly issued and rolled o ver debt
Enhanced (permanent) positive shock (+2p.p./+1p.p) to the short- and long-te rm interest ra tes on newly issued and rolled over debt
40
50
60
70
80
90
100
110
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Gross public debt as % of GDP - SI
Baseline no-policy change scenarioEnhanced (permanent) negative shock (-stdev(11-13) /-0.5p.p.) on GDP growthEnhanced (permanent) positive shock (+stdev(11-13)/+ 0.5p.p.) on GDP growthStandardized (permanent) negative shock (-0.5p.p.) o n in fla tionStandardized (permanent) positive shock (+0.5p.p.) on inflation
Gross public debt as % of GDP - SI (% of GDP) Stochastic debt projections 2014-18, SI
Fiscal sustainability gaps in the medium/long-term significant challenges in SI (1)
9
Fiscal sustainability gaps in the medium/long-term significant challenges in SI (2)
10
-4
-2
0
2
4
6
8
10
12
IT PT LV ES HU FR EA EE DE HR DK EU PL IE BG SE AT SK LT RO UK CZ NL FI MT SI BE LU
Sustainability indicator (S2)
CoA - Others CoA - HC<C CoA - Pensions IBP S2 S2 (SCP scenario) S2 (COM 2013 scenario)
Thank you for your attention!
11
Background slides