{"id":31054,"date":"2023-05-02T14:10:37","date_gmt":"2023-05-02T14:10:37","guid":{"rendered":"http:\/\/lynettelockhart.com\/client\/czech-budget-gap-at\/"},"modified":"2023-05-02T14:13:55","modified_gmt":"2023-05-02T14:13:55","slug":"czech-budget-gap-at","status":"publish","type":"post","link":"http:\/\/lynettelockhart.com\/client\/czech-budget-gap-at\/","title":{"rendered":"Czech budget gap at record $9.3 billion in Jan-April on social spending, energy subsidies"},"content":{"rendered":"

PRAGUE (Reuters) – The Czech Republic’s budget deficit doubled to 200 billion crowns ($9.30 billion) in January-April, a record for the four-month period and reaching two thirds of the full-year target, raising doubts the plan will be met. <\/p>\n

Overall expenditure rose 26.7% due to higher social costs including pensions and subsidies to bring down energy prices – increasing the spending by 88.8 billion crowns combined. <\/p>\n

The state also paid higher interest on inflation-related government bonds as consumer prices continued to surge, with inflation standing at 15% year-on-year in March. <\/p>\n

Budget revenue increased by 11.4% and did not cover the higher spending as the government has collected less than expected from a windfall tax on energy firms and banks.<\/p>\n

Finance Minister Zbynek Stanjura remained optimistic regarding the 2023 budget performance.<\/p>\n

“I expect the state’s performance to improve significantly from the middle of the year at the latest, thanks to additional income from dividends, European (Union) funds and windfall-profit revenue,” he said in a comment on the budget figures.<\/p>\n

The government targets an end of year deficit of 295 billion crowns for 2023. <\/p>\n

The five-party centre-right cabinet has been debating a list of spending cuts and tax hikes to cut the budget deficit by 70 billion crowns next year – which means finding well over 100 billion, because the government has also committed to raise defence spending and teachers’ salaries next year.<\/p>\n

Stanjura said part of the fiscal consolidation measures, due to be presented this month, could already be applied this year. However, the results so far – especially the lower-than-expected windfall tax income and a levy on electricity sales prices – mean analysts are sceptical that the deficit target will be met.<\/p>\n

“We expect a deficit of 315 billion crowns in our baseline scenario,” Komercni Banka economist Jaromir Gec said in a report. “However we see a risk tilted toward an even deeper deficit in relation to a significant downward revision of expected windfall tax revenue.”<\/p>\n

The ministry has cut the expected revenue from the windfall tax and electricity cap by 60% to 40 billion crowns.<\/p>\n

It forecasts the public sector deficit – including the state budget, regional and municipal budgets and the public health system – will reach 4.2% of gross domestic product in 2023, versus 3.6% in 2022. <\/p>\n

\n

(Reporting by Robert Muller and Jan Loaptka; Editing by Susan Fenton)<\/p>\n

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