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September 2, 2018 12:00 am | FILED UNDER: business

Supreme Audit Office Warns Of Budget Deficit

By ČTK Financial Chart on computer screen

Prague, Sept 2 (CTK) – State budget expenditures for investments last year were the lowest in the last 12 years and the state budget was not prepared as balanced despite the high economic growth, says the Supreme Audit Office (NKU) stance to the final state account for last year.

 

The final Kc6.2bn budget deficit was much lower than the planned Kc60bn deficit, it adds.

 

The NKU on the one hand praises the economic performance but on the other hand points at the found shortcomings.

 

“The Czech Republic is undoubtedly doing well, unemployment basically does not exist, industry and the business sector are running at full swing, GDP grows and people do not fear to spend. This development can be labelled as unprecedented,” NKU president Miloslav Kala says in the document.

 

However, the current situation is accompanied by problems which should be solved. “We are not only failing to cut state debt in the current favourable situation but we are also unable to reach at least a balanced state budget,” he complained.

 

The NKU says that investment activity last year was lower than in 2009 when the Czech economy was in recession. In 2009, 11.4 percent of state budget spending targetted investments, while last year the share reached only 6.4 percent. Some Kc82bn went for investments from the state budget last year. Support to investments from the side of the state budget was lower last year than in the years of recession, says the document.

 

The budget deficit is thus to a large extent the result of growth in current expenditures, the NKU says. It points at the fact that total state budget expenditures increased by almost Kc60bn against 2016, but exclusively due to current expenditures.

 

There is yet another problem concerning the low investments, Kala noted. “The economic boom will not last for ever and wasting such an opportunity for making strategic investments and reforms can have painful impacts on the Czech Republic’s future,” he warns.

 

The NKU also notes that important purchases of military technology and equipment were not made even when the Defence Ministry received more money for expenditures.

 

The speed of construction of transport infrastructure does not correspond with the growing traffic. The number of passenger cars on Czech roads grows by 200,000 a year but only 348 kilometres of roads and motorways were built between 2000 and 2017.

 

Among the NKU’s reproaches is also the fact that financial support to disadvantaged regions has not brought the desired effect.

 

The Chamber of Deputies has the final state account on the agenda of its next regular session, deputies can start dealing with it in October.

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