Fjárhagsramma

Fjárhagsramma (fiscal framework) is a structured set of rules, procedures, and indicators that guide the planning, execution, and oversight of public finances over a multi-year horizon. The aim is to promote fiscal discipline, transparency, and sustainability, and to improve predictability for policymakers, markets, and citizens. A fjárhagsramma typically links macroeconomic assumptions, revenue prospects, and spending plans to the present and future budgets.

Core elements commonly found in a fjárhagsramma include a medium-term expenditure framework or multi-year budget envelopes, explicit debt targets or solvency guidelines, macroeconomic and revenue projections, and contingency or stabilization mechanisms. Governance provisions are also central, such as clearly defined roles for the finance ministry, legislature oversight, and publication requirements. Some frameworks may incorporate an independent fiscal institution to provide external forecasts and assessments.

The framework informs the budget cycle: macro forecasts set spending ceilings, policy initiatives are evaluated against the projected path, and the enacted budget is monitored against actual outcomes. Regular updates and revisions are typical, with the framework adjusted in response to economic developments, policy priorities, or debt dynamics.

Benefits of a fjárhagsramma include greater budget credibility, improved long-term planning, and more transparent decision-making. Limitations can include reduced flexibility during downturns, dependence on the reliability of projections, and the need for credible enforcement and institutional capacity to maintain discipline.