The state budget plan for this year predicts a deficit of 252 billion crowns. According to the Head of the State Treasury Zbyňek Stanjura (ODS), although the deficit has already exceeded one hundred billion, this is a year-on-year improvement in the budget deficit of 61.2 billion and a practically balanced monthly economy. At the same time, it was the best March result in the last five years.
On the income side, we can already see a recovery in household consumption
“When extraordinary expenses do not interfere with the budget, the results show a return to normality in the context of high energy prices for households and companies last year, etc. “The reduction of the deficit by 43 billion kroner will be gradually visible on both sides of the budget,” Stanjura said.
Last year ended in financial deficit for government agencies
economy
Budget revenue for the first quarter reached 449 billion crowns. The year-on-year improvement in the balance was contributed by an almost twelve percent increase in income, while expenditures on the other hand decreased by 2.6 percent year-on-year to 554 billion crowns. The negative pace of spending, reflected strongly in tepid government aid related to high energy prices, was boosted by March's 13 billion tax collection.
“Execution of the state budget has traditionally fluctuated and does not grow linearly throughout the year. Therefore, the total balance cannot be automatically evaluated as an index of growth throughout the year and is difficult to compare with previous years, because the implementation of the budget is affected by the different timing of revenues and expenditures and legislative changes. ,” Cyrrus noted Vít Hradil's chief economist.
“However, looking at relatively stable and budget-critical items, there is no reason to believe that there will actually be a significant departure from the government's objective,” he added.
On the revenue side, collections of VAT, consumption taxes, income taxes and social insurance are growing roughly in line with assumptions. “As it can be assumed that the Czech economy still has the best part of the year, tax collection is doing well now,” Haradil pointed out.
In short, the first quarter of the year was roughly in line with the approved budget
Even on the expenditure side, according to him, nothing has happened that deviates from the effects of normal climate or legislative changes. “In short, the first quarter of this year turned out to be roughly in line with the approved budget,” the economist concluded.
Personal income tax collections rose 12.9 percent year-on-year to 40.8 billion crowns in the first quarter. According to the finance ministry, this was positively impacted by measures in the wage growth and consolidation package, lowering the threshold for higher tax rate. 177 billion collected from compulsory insurance premiums, an increase of 7.9 percent year-on-year. Reintroduction of health insurance premium and increase in assessment base for the self-employed contributed to the growth.
Corporate tax revenue grew even faster. Year-on-year, it grew by 16.7 percent to CZK 40.6 billion. Value Added Tax collections rose 8.7 percent to 86.1 billion crowns. 36.9 billion crowns were collected in consumption taxes, up 11.6 percent year-on-year.
The decrease in budget expenditures was mainly due to lower support for households and companies due to lower energy prices, with the state paying 16.6 billion less year-on-year. The largest expenditure item in the budget was social benefits and pensions, which reached a total of 229.2 billion kroner, an increase of 4.8 percent year-on-year. By the end of March, 180.7 billion crowns were spent on pensions, which is 5.5 percent more than last year.
Debt will increase
Last year, the state budget ended with a deficit of 288.5 billion crowns. Regions and municipalities, however, managed a surplus of CZK 70.3 billion. According to a calculation by the Czech Statistical Office, the general fiscal deficit has risen from 3.2 percent to 3.3 percent of GDP in 2022.
High state budget deficit leads to deepening of the country's debt. The state's debt increased by 216 billion compared to last year and stood at 3.111 trillion crowns at the end of the year. Its operating costs increased by nearly 29 billion from 2019 to 68.3 billion crowns last year. This year, debt service costs are set to increase again to 95 billion crowns
In its annual report for last year, the Supreme Audit Office noted the fact that last year's increase in state budget revenues did not help reduce the pace of state borrowing sufficiently. Even with the contribution of an extraordinary tax on windfall income, he could not ensure that the state budget came close to a balanced economy.
SAO: The government has not ensured that the budget comes close to a balanced economy
economy
