Fiscal Responsibility Act must limit its suspension period in case of emergency – IEA

The Institute for Economic Affairs (IEA) has urged the government to amend the Fiscal Responsibility Act to prevent indefinite suspensions, as seen since 2020. It welcomed plans to strengthen fiscal discipline, introduce a 60% debt ceiling, and ensure borrowed funds are used solely for investment to foster growth and prevent recurring debt crises.

The IEA also praised cost-cutting measures in the 2025 Budget, which are expected to reduce total expenditure from 23.7% to 19.2% of GDP. However, it raised concerns over low capital expenditure (2.4% of GDP) and its impact on economic growth.

It criticized the projected 4.0% GDP growth rate for 2025 as below potential and urged the government to maximize available resources to achieve stronger economic performance.