Budget rules

The government makes agreements on budgetary policy when it takes office. Budgetary policy is determined by the government’s expenditures and revenues plans and expected national and international economic developments over the next four years.

Government expenditure and revenue

Central government revenue consists of:

  • taxes (main source of revenue);
  • natural gas revenue;
  • income/profits from state holdings in private enterprises;
  • fines.

The government sets the expenditure for its entire term of office (four years) in real terms when it takes office. The expenditure relates to three sectors: central government (the ministries), social security and care.

The greater part of central government expenditure is financed from taxes. Social security and care expenditure is funded chiefly from contributions (e.g. for unemployment insurance and exceptional medical expenses insurance).

Purpose of the budget rules

The government adopts rules on the implementation of budgetary policy when it takes office. The rules are designed to ensure that financial policy is implemented responsibly. 

The current budget rules are based on a trend-based budgetary policy. And incorporate the main recommendations of the Budgeting Framework Commission.