The Federal Budget 1993: On the Consolidation Track

The Federal Government will continue the fiscal consolidation strategy in 1993. According to the budget proposal the net deficit will be reduced to a ratio of 2.7 percent of GDP. The cyclical effect of the budget is deemed to be neutral. The primary surplus will rise from AS 4 billion (1992) to more than AS 18 billion thereby contributing towards stabilization of federal debt at a GDP ratio of some 49 percent. This will help to expand the fiscal room for manoeuvre over the medium term. More than 20 percent of expenditure are made up by transfers to other government authorities. In the long run, fiscal consolidation ought to be seen as a task not only of the Federal Government but of the public sector at large.