The Fiscal Council assesses that, based on currently available information and forecasts, the conditions for the existence of exceptional circumstances will continue to be met in 2022. The existence of exceptional circumstances in 2022 only allows for flexibility in the conduct of fiscal policy to directly deal with the challenges brought by the epidemic, while its additional expansionary orientation is not justified according to the Fiscal Council’s assessment based on the latest IMAD forecasts. In particular, exceptional circumstances should not be used for the adoption of measures reflecting the final stage of the political cycle. The continuation of exceptional circumstances in 2022 was recommended at EU level by the European Commission in June 2021, which also called for the differentiation of EU Member States’ fiscal policies, taking into account differences in the stage of recovery of economic activity and the different risks to the medium- and long-term fiscal sustainability of each country. In this context, the Fiscal Council assesses that in Slovenia excessive fiscal policy support of economic growth based on significant deficits could create macroeconomic imbalances in the coming years, increase the possibilities for the inefficient use of public funds, reduce opportunities to create room for manoeuvre in bad times and make the transition to the correction mechanism process more difficult. Even only the optimal use of available EU grants, which does not worsen fiscal balance, would provide a major boost to economic growth. While the domestic economic situation is improving this year also as a result of support measures, and the outlook is favourable, the sustainability of the recovery is subject to a number of risks, many related to the further course of the epidemic. The recovery is also seen in the labour market, where some indicators already suggest constraints on the supply side. The Fiscal Council expects that, once none of the both conditions for invoking exceptional circumstances is met, the Government will adhere to the implementation of the correction mechanism in accordance with the legislation, ensure that structural measures are in place to prepare for future shocks, and adequately address the challenges to the long-term sustainability of public finances.