The government sector balance was close to zero again in January-September 2018
KSH reported the government sector balance, by ESA-2010, i.e. on accrual basis, at a deficit of 0.4% of GDP for the first three quarters of 2018. This was in fact almost the same number as the 0.6% of GDP actual recorded in January-September 2017. The message is that government finances have indeed weathered out the election campaign in a fundamentally healthy state. Of course, an important footnote must be here that this was only possible because of the EU's generous contribution in the form of providing development grants, but even so, the achievement is clearly there. Q3 saw fundamentally solid fiscal policy, with a quarterly deficit of 0.7% of GDP, as opposed to a deficit of 4% of GDP in the corresponding period of the previous year.A few days ago the Finance Ministry came forward with a multi-year economic and budget forecast, which is a legal requirement to do at the end of each year. In this, the Ministry predicted a general government deficit of only 1.9-2.1% of GDP for 2018 (in contrast with the 2.4% annual target), 1.8% (against a 1.9% target) for 2019, and 1.5% of GDP for 2020. Given the current strength of the economy and the government's recent success on economising the use of available EU transfers, this medium-term forecast with regularly decreasing budget deficits appears quite credible at the moment. More on this will follow in our next macro forecast, which is due later in January.