The Scottish Government's Medium Term Financial Strategy

Foreword by the Cabinet Secretary for Finance and the Economy

The fourth Medium-Term Financial Strategy (MTFS) is being published today as part of a suite of fiscal publications including the 2022-23 Scottish Budget, the Resource Spending Review Framework and our Public Sector Pay Policy. In addition to these, the forthcoming publication of Scotland's first Framework for Tax will provide a solid foundation from which the design and delivery of devolved tax policy can be based - supporting the recovery, national outcomes and the pursuit of a fairer, greener and more prosperous Scotland for everyone.

Each of the documents published today has a distinct function. The Budget sets out how much money will be allocated to support services and the people of Scotland, and the total amount available to invest. The Resource Spending Review Framework frames the debate around the Scottish Government's spending priorities and the fiscal challenges it faces over the next four years, with clear plans for public spending over the medium-term to be published in the Resource Spending Review in May 2022. Decisions made in the Resource Spending Review will be focused on delivering the government's core missions for this Parliament: reducing child poverty, tackling climate change and securing a stronger, fairer and greener economy.

The role of the MTFS is to provide a medium-term perspective on the public finances, supporting a broad approach to budget evaluation and formation. It ensures that both Parliament and Government have foresight of the financial challenges we face and the opportunities that lie ahead. The MTFS also sets out the principles for how the Scottish Government will exercise its borrowing powers and the Scotland Reserve within the constraints of the Fiscal Framework.

The Scottish Government is committed to meeting the requirements of the Budget Process Review Group^[1] and taking an active approach to protect the long-term fiscal sustainability of public finances through diligent management of fiscal risk. However, this has to be considered within the specific context of our current fiscal constitutional set-up, with the upcoming Fiscal Framework review offering an important opportunity to press for changes to the fiscal levers available to the Scottish Parliament.

Medium-term financial planning is challenging within our complex fiscal landscape. The MTFS ensures the Scottish Government is being honest and open with the public on the risks to the fiscal and spending outlook over the next five years. It is our job as a mature, fiscally responsible government to manage these challenges effectively, and the Scottish Government's approach to long term fiscal sustainability will enable us to deliver our core missions over this Parliament.

Kate Forbes MSP
Cabinet Secretary for Finance and Economy