Czech Deficit Balloons To CZK 274B

At the end of October, the state budget deficit grew to 274 billion crowns from 252.7 billion crowns in September. Last year, at the end of October, the deficit was 19.6 billion crowns. The Ministry of Finance (MF) informed about it. This year’s October result is the worst since the establishment of the Czech Republic. At the end of October, the highest budget deficit in 2009 was 138.1 billion crowns. According to economists, the October results suggest that the whole year’s budget will end with a deficit of up to CZK 450 billion, less than the approved CZK 500 billion.

At the end of October, budget revenues fell by 42.3 billion year-on-year to 1.18 trillion crowns. Tax revenues, including social security premiums, decreased by CZK 61.2 billion year-on-year to CZK 1.02 trillion. Budget expenditures rose by 212.1 billion year-on-year to 1.45 trillion crowns.

The Ministry of Finance also informed that 168.9 billion crowns went from the state budget to combat the coronavirus pandemic at the end of October. For example, direct measures in the form of compensatory bonuses, Antivirus programs, and other programs required 102.6 billion crowns. The Ministry of Finance calculated the deferral of tax advances at 22.4 billion crowns and expenditures on health care in the form of purchasing protective equipment, rewards for health professionals, or debt relief for selected hospitals at 43.8 billion crowns.

The collection of corporate income tax at the end of October fell by 18.3 billion year-on-year to 81 billion crowns. According to the Ministry of Finance, the main reason is the June advance’s waiver on corporate income tax, the possibility of individual determination of different tax advances, or the retroactive application of the tax loss.

The collection of value-added tax fell by 3.3 billion to 236.6 billion crowns. In this case, the year-on-year decline in retail sales had a significantly negative effect. Revenues were also dampened by lower tax rates for regular public transport from last February, for heat and cold from January this year, and for catering services and other services and goods from May and July this year. “A further reduction stems from delayed and unpaid tax payments in the amount of 1.5 billion crowns for the state budget. On the other hand, in October alone, the collection was 0.5 billion crowns higher year-on-year,” said the Ministry of Finance.

In the case of expenditures, capital expenditures grew mainly by 19.6 percent, by 19.9 billion, to 121 billion crowns. Current spending rose by 16.9 percent year on year, by 192.2 billion, to 1.33 trillion crowns.

At the end of October, the state paid 561.4 billion crowns in social benefits, a year-on-year increase of 61.1 billion crowns. Of this, 421.2 billion crowns went to pensions.

Due to the effects of the coronavirus spread on 8 July, the Chamber of Deputies increased this year’s budget deficit to 500 billion crowns. The highest deficit so far was in the 2009 budget due to the global economic crisis’s effects, over 192 billion crowns. For next year, the government approved a budget with a deficit of 320 billion crowns. The proposal has yet to be approved by the House.