The legislation on fiscal responsibility and resilience establishes guidelines for the government to maintain fiscal discipline, transparency, and accountability in financial dealings, as well as ensuring fiscal and debt sustainability. A committee called the Fiscal Resilience Oversight Committee (FROC), formed under these laws, is tasked with monitoring and reporting to the House of Representatives on the government’s compliance with these regulations. The FROC’s findings are detailed in its 2023 Annual Report.
The report begins by discussing economic developments in 2023, noting a 5.5% estimated growth rate primarily driven by tourism recovery and construction expansion. Increased imports due to growth in service sectors widened the trade deficit, partially offset by revenue from tourism, the Citizenship by Investment Programme, and foreign direct investment. The government’s fiscal performance was positive, and the financial system remained stable. Inflation decreased, and unemployment rates improved. However, projections suggest a moderation in economic growth and government finances over the medium term.
In 2023, the government adhered to the Fiscal Responsibility Act, meeting criteria such as real growth in primary expenditure, the wage bill, primary balance, and liabilities of public-private partnerships. However, the debt-to-GDP ratio exceeded the targeted 55%. Moving forward, the government aims to comply with the Fiscal Resilience Act from 2024 onwards, focusing on the wage bill and primary balance, with a debt target of 60% of GDP by 2035.
Efforts were made in 2023 to enhance fiscal transparency, with most fiscal and debt reports published as required by law. However, the absence of audited public accounts since 2016 undermines oversight and accountability.
The FROC’s recommendations include refining the Fiscal Resilience Act, enhancing fiscal transparency, and supporting economic growth and transformation.