Prague, Aug 1 (CTK) – Czech state budget showed a Kc16.58bn surplus in July after a Kc5.9bn deficit in June, and last July saw a surplus of Kc24.97bn, the Finance Ministry said today.
This year’s budget has been approved with a Kc50bn gap.
Two factors have been negatively influencing the annual figures since April, said the ministry. It is the amount of Kc5.8bn transferred from the privatisation fund to the state budget last April to cover the deficit of the pension insurance system, and the second factor is a transfer of Kc4.3bn to insurance funds of the state-run Export Guarantee and Insurance Corporation (EGAP) in April.
“Adjusted for these effects that impair international comparability, the state budget would show a better result than at the end of July 2017,” the Finance Ministry said.
Adjusted for the EU’s funding, the budget would post a deficit of Kc4.1bn in July, against a surplus of Kc5.6bn in July last year.
State budget revenues grew by Kc62.1bn yr/yr to Kc799.4bn and expenditures rose by Kc70.5bn to Kc782.8bn. Tax revenues including social insurance payments were Kc48.6bn higher at some Kc703bn.
“Public finances are showing no signs of defects,” said UniCredit Bank chief economist Pavel Sobisek.
However, it needs to be taken into account that revenues are growing due, above all, to a strong economic growth, which will not continue for ever, said Sobisek.
The budget is largely affected by an improving labour market situation, said Komercni banka economist Viktor Zeisel.
“We estimate that the average nominal wage will increase by 8 percent this year. In addition, employment is rising mildly,” he said.
The government’s investment activity and economic performance in the months ahead are the main factors to influence this year’s budget deficit, said Cyrrus chief analyst Lukas Kovanda.
Given the current slowdown, the gap may be wider this year. Overall public finances are badly affected by the fact that there is no will to reduce the state debt in absolute terms and that big emphasis is laid on current exenditures at the expense of investment expenditures, Kovanda said.
VAT revenues rose by an annual rate of 4.5 percent to Kc160.3bn and excise duty revenues increased by Kc0.6bn to Kc87.3bn.
A total of Kc322.1bn was paid in social benefits in January-July, Kc16.7bn more yr/yr. Social benefits spending is projected at Kc557.9bn this year.
State budget data for January-July in 2006-2018 (Kc mil.):
Source: Finance Ministry