determined. In addition, the Strategy Document defines indicators for the monitoring of each policy
programme and their sub-programmes. The attainment and influence of the set objectives is examined in
connection with the annual revision of the Strategy Document. The funding of the policy programmes is
agreed on in the Government spending limits.
3. Public expenditures in the medium term
General government expenditure increased very rapidly in the early 1990s, primarily as a result of the
economic recession. At the same time total output growth fell into negative territory, and consequently
the expenditure-to-GDP ratio increased by double digits in the space of five years. General government
expenditure as a proportion of GDP peaked at 65 per cent in 1993, since when the figure has fallen back
to 51 % of GDP in 2004 as a consequence of several retrenchment measures. The decrease in social
security expenditure during this period is greatly due to pension reforms and lowered unemployment
security costs following the recovery of employment after the recession.
Figure 2 – General government expenditure by function0102030405060701990 1992 1994 1996 1998 2000 2002 2004 2006 2008Ge n e r a l p u b lic
services, defence,
public order and
safety
Economic affairs,
environmental
protection, housing
and community
Educ a t ionHe alt hSocial protection% of GDPIn 2005 the general government expenditure-to-GDP ratio will rise somewhat from the previous year to
51½ per cent because the value of GDP growth will remain modest. In 2006 it is projected that the ratio
will return to 51 per cent. In 2007-2009, the ratio of general government expenditure to GDP is expected
to remain stable. The Government Programme sets out in quite some detail the principles for key income
transfers over the current electoral period, i.e. through to 2007. The central government spending limits
procedure will also facilitate the management of public spending.
The biggest public expenditure categories are social security, health care and education, which in 2004
accounted for 21.9, 6.7 and 6.5 per cent of GDP, respectively. Although it is thought there will be no
major changes in this general structure of tasks in 2005-2009, there are already some early indications of
future structural changes, i.e. the growing share of social and health care expenditure and the decrease in
general administrative costs.