William Malcolm

Budget Deficit Hits 335 Billion Crowns

The state budget deficit at the end of October rose to 335 billion crowns from 326.3 billion crowns in September. The Ministry of Finance informed about it today. This is the worst October result since the establishment of the Czech Republic. Last year, at the end of October, the deficit was 274 billion crowns.

At the end of October, total budget revenues increased by CZK 24.6 billion year-on-year to CZK 1.2 trillion. Tax revenues, including social security premiums, increased by CZK 35.4 billion to CZK 1.05 trillion year-on-year, while tax revenues excluding insurance premiums alone fell by CZK 13.7 billion to CZK 563.6 billion. At the end of October, total budget expenditures rose by 85.6 billion year on year to 1.54 trillion crowns.

“Limited economic activity at the beginning of the year, exacerbated by reductions in labor, capital or property taxation and a change in the tax budget, has a negative impact on the collection of state budget tax revenues. decline in state budget management, “said the Ministry of Finance.

Komerční banka economist František Táborský pointed out that the month-on-month widening of the state finance deficit decreased to CZK 8.7 billion, which is the lowest value since the outbreak of the pandemic. “Compared to the previous month, the result is mainly due to slower expenditure growth,” he added.

The chairwoman of the National Budget Council, Eva Zamrazilová, estimated that without the current problems in the automotive industry and the planned compensation of energy prices, the total result of the state budget for the whole year could be around 350 billion crowns. “In any case, it will not exceed 400 billion crowns,” she said. Táborský expects a similar result.

The ministry informed that 459.9 billion crowns went from the state budget to fight the coronavirus pandemic from last March to the end of October this year. Direct measures, for example in the form of compensatory bonuses, Antivirus programs and other programs, required CZK 296.6 billion. The deferral of tax advances was calculated by the Office at 37 billion crowns and health care expenditures in the form of the purchase of protective equipment, rewards for health professionals or debt relief for selected hospitals at 126.3 billion crowns. From January to October this year, the Ministry of Finance calculated the total aid from the budget at 241.8 billion crowns.

At the end of October, the collection of value added tax increased by CZK 5.4 billion year-on-year to CZK 242 billion. The collection of corporate income tax increased by 23.1 billion to 104.1 billion crowns year-on-year.

On the other hand, the collection of personal income tax fell by 35.8 billion to 85.4 billion crowns. According to the Ministry of Finance, the year-on-year comparison reflects the impact of tax changes effective since 2021, in particular a reduction in the tax base by more than 25 percent and an increase in the taxpayer’s rebate. The collection was also negatively affected by the compensation bonus paid during 2021.

In the case of expenditure, current expenditure increased. At the end of October, the state spent 1.42 trillion crowns on current expenditures, a year-on-year increase of 92.6 billion. On the other hand, capital expenditures fell by seven billion to 114.1 billion crowns year-on-year. The approved budget envisages capital expenditures of 185.2 billion crowns for the whole year.

At the end of October, the state paid 577.5 billion crowns in social benefits, a year-on-year increase of 16.3 billion crowns. Of this, 442.8 billion crowns went to pensions.

This year’s approved state budget deficit is 500 billion crowns. According to the expectations of the Ministry of Finance, however, the budget will end with a deficit of approximately 400 billion crowns. Last year, when the result was affected by the effects of the pandemic, the budget ended in a deficit of 367.4 billion crowns. For next year, the government approved a deficit of 376.6 billion crowns. However, according to the candidate for Prime Minister Petr Fiala (ODS), the emerging coalition government wants to draw up a new state budget for next year with a deficit of up to 300 billion crowns.