Fiscal and debt strategy

Abstract

The Fiscal Responsibility Act (Law Number 7/2013) obligates the Government to submit a Medium Term Fiscal Strategy Statement and a Medium Term Debt Strategy Statement to the People’s Majlis before the end of July every fiscal year. The Ministry of Finance and Treasury has accordingly submitted these statements to the Majlis since the entry into force of the Fiscal Responsibility Act. The Ministry believes that these strategy statements, as important policy documents, requires a broader audience. As such the 2018 statements would be the first to be published on the Ministry’s website and made accessible to the general public. This document combines the Fiscal Strategy and the Debt Strategy submitted to the People’s Majlis in July 2018. The documents are drafted to meet the guidelines specified in the Fiscal Responsibility Act. Furthermore, these strategies are also drafted as guiding documents to the policy makers from both the executive and the legislative branch of the Government to gauge the fiscal performance during the year, the debt conditions and the potential fiscal and debt strategy options to meet fiscal targets set under the Fiscal Responsibility Act. As a document submitted in July, the reference period for the document is January to June 2018. As such the policy analysis and proposals are based on the best information available up to this period. The documents are presented to the reader as submitted to the People’s Majlis in July 2018, with some corrections for data errors. The readers should also be aware that the budget numbers presented here for future years are forecasts produced by the Ministry in July 2018 and does not constitute approved figures by the People’s Majlis. Similarly, figures for the ongoing year has been revised in July and are subject to further change when Budget 2019 is submitted to the Majilis. The annual budget would be submitted to the People’s Majlis by the end of October to be approved by the Majlis before the commencement of the fiscal year in 2019. The document is broken down into three main areas. 1. Economic and Fiscal Developments - looks at the macroeconomic developments during the first half of the year and the economic prospects for the rest of the year. The section also looks at the realization of the approved budget for 2018 in the first six months of the year. 2. Medium Term Fiscal Strategy 2019-2021 – this section looks at the fiscal strategy objectives of the Government and highlights measures to ensure the effective implementation of the fiscal strategies of the Government. The section also looks at the revised budget for 2018, the baselines budget estimates for 2019 and the medium term budget estimates. 3. Medium Term Debt Management Strategy 2019-2021 – this section details the position of the debt portfolio at the end of 2017, the estimated debt position at the end of 2018, and the strategy for debt management for the period 2019-2021