Fiscal discipline is seen to be equally important by, and fiscal policy should ensure that public expenditures and debt remain at reasonable levels in relation to national aggregates in order to prevent economic growth being restrained by crowding-out, anticipated future tax increases and inflationary pressures.
During the pandemic, significant fiscal and monetary support has played an important role in protecting the balance sheets of financial institutions. However, fiscal space is more limited than it was prior to the outbreak of the COVID-19 pandemic, given the increase in public debt that we have seen over the past years.