According to CNB estimates, total government debt should rise to 43.3 percent of GDP this year from 38.4 percent last year. Next year, the debt should increase to 46.7 percent. The CNB also worsened its estimates compared with November.
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According to estimates by the Ministry of Finance in the January macroeconomic forecast, Czech public finances should end up in a deficit of 6.6 percent this year. The ministry expects the total debt to be 43.3 percent of GDP this year. The Ministry of Finance did not provide an estimate for next year.
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EU rules normally require a deficit below three percent of GDP and a debt below 60 percent of GDP.
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At the same time, the CNB expects the economy to grow by 2.2 percent this year and 3.8 percent next year in a new forecast presented on Thursday. According to today’s statement by the director of the CNB’s monetary section, Petr Král, the economy will return to the pre-crisis level at the end of next year.
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“After the year-on-year decline eased in the first quarter, GDP growth will shoot more than seven percent in the short term in the spring, due to a slowdown in economic activity during last year’s first wave. However, the domestic economy will not breathe really robust and sustainable growth until the summer, ”said Král in the introductory part of the Monetary Policy Report published on Friday.
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According to him, households will, among other things, begin to partially compensate for previous forced deferred consumption when returning to normal life. “However, the tightness of family budgets will not allow a rapid return of private consumption to pre-pandemic levels,” he added.
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Regarding the tax package, which, among other things, abolished the super-gross wage and reduced taxation, the King said that he would not support private consumption too much. “Households will save a significant part of the additional income, and part of this intended short-term stimulation of private consumption will thus have no effect,” he said.
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The balance of public finances is calculated from the difference between revenues and expenditures of ministries and other state authorities, cities and municipalities, selected contributory organizations, state and other extra-budgetary funds and companies, public universities, public research institutes, health insurance companies, health insurance associations and unions and the Center. interstate payments.
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