This presentation was made by Ales Delakorda, Slovenian Fiscal Council, at the 11th Meeting of OECD PBO & IFIs held in Lisbon, Portugal, on 4-5 February 2019

1. Session 3: Best practice products from the PBO
network
Fiscal and macroeconomic consequences of
the Coalition Agreement
11th Annual Meeting of the OECD Network of Parliamentary
Budget Officials and Independent Fiscal Institutions (PBO)
Aleš Delakorda, Head of Analysis, Slovenian Fiscal Council
Lisbon, Portugal
4-5 February 2019

2. Slovenian Fiscal Council – background
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• New institution
• Limited human resources and analytical tools
• Relatively narrow scope of tasks defined by legislation

3. Road leading to assessing political manifesto in Slovenia in 2018
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Political milestones Selected policy actions Fiscal Council (FC) communication
Jan
Feb
Mar Government resigns FC call on Parliament
Apr Stability Programme update FC assesses Stability Programme
May FC annual report 2017
Jun General elections FC assessment of rules in 2017
Jul
Aug Proposal to raise spending threshold FC call on Government
Sep Government confirmed FC assesses Coalition Agreement
Oct
Nov
Dec MTBF & DBP prepared FC assesses MTBF & DBP
Remark: Bold red and boxed text marks FC's
interventions not required by legislation.
Proposals on increasing expenditure
building up among the coalition and
opposition parties

4. Key aspects of Coalition Agreement
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• Relatively rich depth of proposals: measures and targets
• Expenditure-oriented
• Weak definition of revenue measures
• Clear short-term orientation
• Timing of measures not clear in all cases

5. Key challenges of publishing the evaluation of the Coalition Agreement
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Identification
Estimation
Presentation
Data
Clear definition
Analytical tools
Yes No
Qualitative evaluation
Presenting results
Results
Informal consultations
Identification possible?
List of measures
Static simulation
Dynamic simulation

6. Key results: static fiscal effects
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2019 2020 2021 2022
Revenue 1.9-2.2 2.2-2.5 2.4-2.9 2.8-3.2
Expenditure 2.7-3.2 3.8-4.8 4.9-6.4 6.1-8.0
NET EFFECT ON PUBLIC FINANCE -0.6 to -1.4 -1.3 to -2.6 -2.0 to -4.0 -2.9 to -5.2
in % of GDP
Note: Nominal GDP in 2022 is set by extrapolating the 2021 growth rate from IMAD 2018 Spring Forecast (5.3 %).
Source: FC estimates.

7. Key results: dynamic fiscal effects
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-3
-2
-1
0
1
2
2015 2016 2017 2018 2019 2020 2021 2022
-3
-2
-1
0
1
2
balance SP forecast simulation 1 simulation 2
Dynamic simulation of measures: effects on the general
government budget balance
Source:SORS, forecast: Stability Programme2018,FC calculations.
in % of GDP
31000
32000
33000
34000
35000
36000
37000
38000
2015 2016 2017 2018 2019 2020 2021 2022
31000
32000
33000
34000
35000
36000
37000
38000
debt SP forecast simulation 1 simulation 2
Dynamic simulation of the measures: effects on general
government debt
Source:SORS, forecast:Stability Programme2018,FC calculations.
EUR million

8. Key results: dynamic macroeconomic effects
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2
3
4
5
6
2015 2016 2017 2018 2019 2020 2021 2022
2
3
4
5
6
GDP IMAD forecast simulation 1 simulation 2
Effects on real GDP growth
Source:SORS, forecast:IMAD Spring forecast 2018,FC calculations.
in %
-1
0
1
2
3
2015 2016 2017 2018 2019 2020 2021 2022
-1
0
1
2
3
CPI IMAD forecast simulation 1 simulation 2
Effects on inflation
Source:SORS, forecast:IMAD Spring forecast2018,FC calculations.
yearaverage,in %

9. Key results: compliance with fiscal rules
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2019 2020 2021 2022
Structural balance
Stability Programme 2018 -1,1 -0,4 0,1 0,4
Static simulation 1 -1,7 -1,7 -1,9 -2,5
Static simulation 2 -2,4 -3,1 -4,0 -4,9
Dynamic simulation 1 -2,0 -1,9 -1,9 -2,1
Dynamic simulation 2 -2,4 -2,4 -2,5 -2,8
Structural effort
Stability Programme 2018 -0,5 0,7 0,5 0,3
Static simulation 1 -1,1 -0,1 -0,2 -0,5
Static simulation 2 -1,9 -0,6 -0,9 -0,9
Dynamic simulation 1 -1,5 0,1 -0,1 -0,1
Dynamic simulation 2 -1,8 0,0 -0,1 -0,3
One-off measures 0,0 0,0 0,0 0,0
Output gap (June 18) 2,7 2,1 1,7 1,7
share of GDP, in %
Note: Nominal GDP in 2022 is set by extrapolating the 2021 growth rate from IMAD Spring Forecast 2018 (5.3 %). The nominal general government
balance for 2022 was defined by extrapolating an identical increase in balance as forecast for 2021 in the 2018 Stability Programme. The public debt
was determined accordingly. Results of two simulations based on different assumptions with respect to the implemented measures from the Coalition
Agreement are presented. Simulation 1 includes a combination of measures with the biggest static effect on revenue and the smallest static effect on
expenditure. Simulation 2, by contrast, includes a combination of measures with the smallest static effect on revenue and the biggest static effect on
expenditure. See Appendix 2.
Source: MoF Stability Programme 2018, FC estimates.

10. Risks, reactions and lessons learned
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• Highliting risks when publishing the evaluation
• Strong media AND political reaction
• Even more caution needed when presenting results
• Need to (further) educate media and MPs on fiscal policy basics
• Clear orientation for further development of analytical tools

11. Session 3: Best practice products from the PBO
network
Fiscal and macroeconomic consequences of
the Coalition Agreement
11th Annual Meeting of the OECD Network of Parliamentary
Budget Officials and Independent Fiscal Institutions (PBO)
Aleš Delakorda, Head of Analysis, Slovenian Fiscal Council
Visit us at: www.fs-rs.si/news
Lisbon, Portugal
4-5 February 2019