The Fiscal Framework is a set of rules agreed by the States to govern how we manage our public finances. These rules were first agreed in 2009 and then updated in 2016. They commit the States to a guiding principle of permanent balance. That is, in the long-term, the States should not spend more money than it receives in taxes and other sources of income.
The Framework rules also state that the States should:
- Not allow any temporary deficit to exceed 3% of GDP
- Address any deficit within 5 years
- Not allow the total amount of revenue the States collects from people and businesses to exceed 28% of GDP
- Invest an average of 3% of GDP a year in maintaining and improving the islands infrastructure
- Not allow the States' total debt to exceed 15% of GDP
The States' performance against these rules is monitored each year in the Annual Independent Fiscal Review.