The ratings on Denmark reflect policymakers' longstanding commitment to fiscal discipline. The general government is expected to continue posting significant fiscal surpluses, equivalent to 1%-2% of GDP in the medium to long term (excluding flows to and from the defined contribution pension system). Having peaked at 80% of GDP in 1993, general government debt is expected to fall to an estimated 32% of GDP by year-end 2006 and is forecast to continue declining steadily in the medium term. The sustained decline in the public debt burden, coupled with a robust pension system and efforts to boost labor-market participation, is expected to provide sufficient fiscal flexibility to meet the challenge of an aging population. Denmark's strong macroeconomic policy record and its
