- The 2022 Budget lays out an exit path from the extraordinary policies of 2020-21, largely by curtailing the increase in spending, both Covid- and infrastructure-related.
- Revenue targets remain in line with post-pandemic realities, while changes to the tax code in 2022 are expected to be broadly revenue-neutral (i.e. tax hikes/new taxes offsetting tax cuts).
- The pandemic itself remain the primary source of fiscal risk in 2022, since the budget rests on the assumption of relatively robust recovery, with minimal drag from potential Covid wave(s) in the future.
- The increase in interest payment means that the government will have limited fiscal space in the future, especially as the government intends to bring the deficit under the mandatory limit of 3% of the GDP by 2023.
- The lack of fiscal space means that the government will have to focus on boosting growth via non-budgetary means, particularly through implementing structural reforms as laid out by the Omnibus Law on Job Creation.
