William Malcolm

Czech Deficet Jumps To CZK 192 Billion

At the end of April, the state budget deficit rose to 192 billion crowns from 125.2 billion crowns in March. This is the worst April result since the establishment of the Czech Republic. Last year, at the end of April, the deficit was 93.8 billion crowns.

According to the Ministry of Finance, the widening of the deficit is the result of the effects of the pandemic, which led to a decline in tax revenues caused by, among other things, tax cuts and the abolition of super-gross wages, changes in tax budgets in favor of regions and municipalities and continued economic support.

At the end of April, total budget revenues fell by CZK 26.2 billion year-on-year to CZK 441.8 billion. Tax revenues, including social security premiums, fell by CZK 21.7 billion year on year to CZK 374.6 billion. Total budget expenditures increased by 72.1 billion year-on-year to 633.8 billion crowns.

The Ministry of Finance also informed that 313.1 billion crowns went from the state budget to combat the coronavirus pandemic from last March to the end of April this year. Direct measures, for example in the form of compensatory bonuses, Antivirus programs and other programs, required 202.3 billion crowns. The deferral of tax advances was calculated by the Ministry of Finance at 26.9 billion crowns and expenditures on health care in the form of the purchase of protective equipment, rewards for health professionals or debt relief for selected hospitals at 83.9 billion crowns. From January to April this year, the Ministry of Finance calculated the total aid at 95.1 billion crowns.

At the end of April, the collection of value added tax fell by about two billion year on year to 88.2 billion crowns. “Purely in April, the collection at the level of public budgets was higher by 10.5 billion crowns year-on-year,” the Ministry of Finance pointed out. According to the Office, the main reasons are the extraordinary fall in collections in April 2020 due to the outbreak of a pandemic, the higher number of working days in 2021 and the actual postponement of the deadline for filing tax returns for the tax period February 2021 to 15 April 2021.

The collection of personal income tax decreased by CZK 13.9 billion year-on-year to CZK 25.5 billion. According to the Ministry of Finance, the main reason is the impact of tax changes effective from this year, for example, a reduction in taxation and an increase in the taxpayer’s rebate.

In the case of expenditure, current expenditure increased. At the end of April, the state spent 595 billion crowns on current expenditures, a year-on-year increase of 73.2 billion. On the other hand, capital expenditures fell by 1.1 billion year on year to 38.8 billion crowns. “Capital expenditures are traditionally lower at the beginning of the year, which is related to the implementation of investments mainly in the second half of the year,” said the Ministry of Finance.

At the end of April, the state paid 234.8 billion crowns in social benefits, an increase of 11.8 billion crowns year-on-year. Of this, 178.7 billion crowns went to pensions.

The state budget deficit of 500 billion crowns is newly approved for this year. Originally, the budget was approved with a deficit of 320 billion crowns.

For the whole of last year, affected by the effects of the pandemic, the state budget ended in a deficit of 367.4 billion crowns.