In 2021, the budget is to manage revenues of 1,328.2 billion crowns and expenditures of 1,648.2 billion. Of these, a record 187 billion will be invested, the minister emphasizes.
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Behind the high proposed deficit are the effects of the ongoing covid-19 pandemic and efforts to kick-start the economy after the slump.
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“I know from negotiations with the finance ministers of other EU countries that all countries are proceeding in a similar way or helping even more. However, the Czech Republic has the undeniable advantage that we have managed to reduce the state debt from 41 percent to 29 percent of GDP in the past seven years and thus move our public finances to the fourth best place in the EU. Thanks to these initial conditions, our debt-to-GDP ratio will remain lower at the end of this year than we reported in 2013, ”said Schillerová.
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On the revenue side, the budget envisages, for example, a decline in the collection of taxes and insurance premiums due to the economic downturn of almost 100 billion crowns. On the expenditure side, an additional 53 billion will go to health care and 15 billion to social and sickness benefits. In addition to the covid measures, almost 30 billion crowns will be needed for the statutory valorisation of pensions, 19 billion for teachers’ salaries and another 13.5 billion for the abolition of the real estate acquisition tax.
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It is important to save on traffic
However, the draft budget does not envisage the abolition of the super-gross wage and other changes to the so-called 2021 tax package. This is still being negotiated, although the governing coalition expects it to enter into force as early as the New Year.
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Economists addressed by Právo have previously estimated that the deficit of the next budget will reach 250 to 400 billion crowns, depending on the development of the disease. “If the current government fails to bring the spread of covid-19 under control, the deficit will be closer to the upper limit of the estimate, ie minus 400 billion,” said Raiffeisenbank chief economist Helena Horská.
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According to Schiller’s proposal, most resorts are to improve in the new year, but they have to save on operations. “The rate of austerity measures of five percent of the state’s operating costs was set to be budget-efficient, but at the same time did not cause undesirable interventions in the state’s ability to act, public services and worsen economic expectations,” Schiller said.
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The deficit originally approved for this year was CZK 40 billion, as in 2019. However, the spring arrival of the pandemic changed everything and deputies repeatedly increased the deficit to a record half a trillion crowns at the suggestion of the government.
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However, the implementation so far suggests that the actual deficit could be slightly lower than the approved 500 billion this year.
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The highest deficit was previously in the 2009 budget, at a time of global economic crisis. At that time it was over 192 billion crowns.
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