Best deficit since 2008’s financial crunch
11. 1. 2016 | Source: BusinessInfo.cz
The Czech economy last year broke free of the shackles of the protracted economic crisis, producing an improved annual balance sheet for the treasury.
The state budget deficit of CZK 62.8bn was CZK 37bn lower than was estimated when the 2015 spending and taxing plans were passed by parliament. But prime minister Sobotka's government can take little credit for the improvement in the public finances, according to David Marek, chief economist at Deloitte Czech Republic. Marek viewed the progress as brought about by the domestic economy's 12-month rate of growth, one of the highest in Europe at four percent.
Finance minister Andrej Babiš (ANO), however, presented the result as a personal achievement: "Our expectation that we would approach [a final deficit of ] CZK 70bn has proven justified. What we have is the result of a vastly improved performance by the financial and customs administration," he said. He also praised the state's ability to utilise available European funds.
Financial analysts, on the other hand, tended to associate the lowered deficit with decisions made by the previous government, that of ex- PM Petr Nečas. Even though Nečas' more right-leaning government's austerity measures meant the recession lingered a little longer, they also helped to get the state's finances into reasonable shape. "The current government is reaping the fruits of efforts made by the previous administration, which paid dearly for keeping the budget deficit in check," Marek added.
The state's total revenues increased by CZK 100.7bn last year to total CZK 1.235tn. Total spending rose by CZK 85.7bn year on year to hit CZK 1.297tn. The finance ministry expected the 2016 budget deficit to reach CZK 70bn, before dropping to CZK 60bn next year and CZK 50bn in 2018. "We have embarked on a road that will lead us to a balanced budget and a reduced national debt," said Babiš.
Originally published in E15 weekly, economic and business newsmagazine. Author: Jana Havligerová