At the beginning of July, the Ministry of Finance sent out a draft budget, saying that it does not want to publish its form yet. What do you not like about such a procedure, why did you criticize it?
Because this is the first time in history. The legal deadline is June 30, when the minister must send the chapters their budget proposals. Then the interaction takes place, the chapter administrators break it down. It is a two-month phase, at the end of which the Minister of Finance submits a complete budget proposal to the government.
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We will know when they present it to the government, so this is crying over spilled milk. However, we always knew the original proposal on June 30, and it was very important to me as the Minister of Finance. Not only was the feedback from the chapter administrator as a minister’s colleague important to me, but also from the professional public who are interested in the budget, either because they draw from it or because they pay for it.
Feedback and public discussion contribute to transparency and to the government correcting its priorities – two months of discussion about the priorities that we all see differently in society and the money that belongs to the public.
The government will decide on the form of the budget together, and not during bilateral negotiations between individual ministers and the head of the finance department. Isn’t this a manifestation of the transparency that the opposition is calling for so much?
That’s not true. It is understandable that the ministers acted bilaterally, but only in private. If something goes on behind the scenes, it’s a reduction in transparency, not an increase in it. It’s not about life, and I think we talk about it longer than it deserves. It’s just different, for the first time in history. A change in method that I don’t like, that’s why I criticized it. But I don’t think the quality of the budget stands or falls with it. After all, we’ll see how it turns out.
The opposition is there to criticize, but when we remember the fiasco of the president’s efforts for joint negotiations between the coalition and the opposition on the pension reform… Isn’t it a shame that the parliamentary opposition is not more constructive in these matters?
Of course that’s a shame. God pay for the consolidation package – it’s no miracle, the government basically offset the spending it raised itself – but it’s better than nothing. It would have been much worse without him.
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If Andrej Babiš says today that “if we win the elections, we will cancel all of this”, then that is the road to hell. Everything positive that was started by the Nečas government was actually canceled by Messrs. Sobotka and Babiš with the support of the communists and they did nothing for eight years. If they repealed it and replaced it, I would take it, but we will not move towards greater prosperity without major systemic changes. All economists agree on this.
And if we torpedo each other’s fundamental systemic changes so that none happens, then we are doomed to eternal stagnation and eternal indebtedness. That’s a big shame.
In your opinion, a balanced budget is not the goal at all costs, but shouldn’t we be aiming for that?
If the Minister of Finance were Miroslav Kalousek now, then in this situation, on August 19, he would have no choice but to hang himself.
Miroslav Kalousek
This year, no extraordinary expenses are budgeted, we have essentially no unemployment, there is some growth, albeit very small. You could say that these are normal economic times. It is not normal for the government to have to borrow 270 billion in normal economic times.
How big of a deficit do you think would be defensible at this point?
I was looking forward – and I would have applauded – for the government to fulfill the words of its prime minister. On March 30, 2023, he said at a press conference: We will take such measures to reduce the deficit at the rate of 1% of GDP per year. He even added the correct number to it, roughly 70 billion a year.
This rate would be impressive, many economists praised it, I was very much in favor of it. Minister Schiller said that a percentage is too much, that half a percent is enough, which is certainly up for discussion. The pace of consolidation has its pros and cons. But in the end it was not even half a percent and I am afraid that the problem will persist next year and the structural deficit will be the same as this year.
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What would the budget look like if the Ministry of Finance was headed by Miroslav Kalousek?
If the Minister of Finance was Miroslav Kalousek, in this situation, on August 19, he would have no choice but to hang himself. Consolidating at that pace, whether half a percent or a percent per year, requires a change in budget legislation on either the spending or revenue side. You can’t change any laws now.
You can only scratch where you have a relatively small space because more than 80% of the budget is predetermined, whether by law or labor contracts or whatever. You can only save on a very small space and it is not enough for you. Real consolidation means systemic changes in mandatory insurance premiums, in the structure of state employees, state administration, in subsidy policy, wherever you look. It’s not just about having a smaller deficit.
We are almost the worst. We are in debt for being stagnant.
Miroslav Kalousek
One thing is how big the deficit is, another is how prosperous we are, that is, what the growth is. In Europe, you have countries that do not borrow much, but have fast growth – such models as Denmark and the Netherlands. Then you have states that get into debt very quickly, but have rapid growth, their real wages are growing and you can say that they are prosperous, but they pay for it with the speed of their borrowing. A typical example is Poland. It’s not ideal, but it’s something. We go into debt and buy prosperity with it.
Then there are the states where we are almost the worst off, which are stagnating and at the same time getting into debt. We are in debt for being stagnant. If we were at least able to buy prosperity with this borrowing, that would be much more tolerable, but it requires systemic changes and that will not happen.
What would Miroslav Kalousek praise the current government for in budgetary policy? According to him, in what condition is TOP 09, which he co-founded? And is he planning to start a new political party? Listen to the full interview, the audio is at the top of the article.
