Alena Schillerova

Petr Dubinsky

Schillerova Pledges To Balance Budget By 2028

The state budget should be balanced or in surplus within seven years, ie in 2028. The plans of the Ministry of Finance (MF) envisage this. This was stated by the Minister of Finance Alena Schillerová in response to the report of the National Budget Council. She added that when introducing the planned savings, the consolidation of public finances should be even greater than recommended by the Council in the quarterly report on the state of public finances.

The Council stated today that the Czech Republic would achieve the so-called debt brake later than 2024, in the current development of the economy and the plans of the Ministry of Finance regarding the consolidation of public finances, by about two to three years. After exceeding 55 percent of gross domestic product (GDP), the government must submit a proposal for a balanced or surplus state budget and funds. The Council further stated that, according to calculations, a collision with the debt brake could be avoided in the future by a very slight increase in the annual consolidation effort, from 0.5 percent of GDP to 0.65 percent of GDP.

According to the latest macroeconomic forecast, the Ministry of Finance expects the structural deficit, which is the general government deficit adjusted for the economic cycle, to decrease by 0.5 percentage points per year. From 6.1 percent of gross domestic product this year, the deficit should fall to 4.6 percent in 2024. In the case of the savings planned by the Ministry of Finance, the deficit should fall to 3.9 percent of GDP by 2024. The savings should relate to operating expenses, adjustments to excise duties, the revision of global corporate taxation, and the continued reduction of tax exemptions.

“Thanks to this stronger consolidation effort, debt will not exceed 50 percent in 2024 and the structural deficit will decline at an increased rate of up to 0.8 percent of GDP from 2023. In this case, even according to the Budget Council, which recommends a consolidation effort of 0.65 percent of GDP, we will comfortably avoid a collision with the debt brake in the coming years.