Lidovky.cz: what do you think of the draft state budget for 2022?
At the moment, I have an idea of one thing that is indirectly related to the budget, but makes sense in the long term-and that is the need to depress the current high inflation. Labour market measures could contribute to this. You can see how much we miss the foreign workers who used to be here. From Ukraine and other countries. This pushes up wages and, by extension, inflation. So, the government should release the arrival of foreign workers as soon as possible.
The relationship to the budget is that taming inflation with interest rates means increasing the cost of servicing government debt. And this can be a big problem with today’s volume of debt – in the draft budget for this year, debt servicing amounts to almost CZK 50 billion. We’re talking about a very near future.
Lidovky.cz: how do you assess the proposed cuts?
As far as operating expenditure is concerned, if this leads to a sharp reduction in employment in the civil service, then that will only be a good thing. Our state administration is huge, and it’s not exactly a productive part of the economy. It’s a long haul. This year, such savings will not be reflected.
Lidovky.cz: do you think it is possible to reduce budget deficits when the budget comes by abolishing super-gross wages by about CZK 100 billion a year?
This could only be achieved if the costs of running the state were significantly reduced in the long term in a similar way. That is, mainly state-paid expenditures from public budgets. But I don’t think the state would be able to do that, that it would be able to do that.
Reality and dreaming. In the budget you can make cuts, but it will hurt |
Lidovky.cz: will people feel the budget cuts this year?
Not really. We have a high proportion of mandate and quasi-mandate spending that remains. Rather, he will feel that the abolition of the super-large wage, by which the government wanted to support the income situation of families, has strengthened the division of society, because it has widened the gap between low-and high-income groups. Similarly problematic was the ill-conceived state aid to the business sector. Unfortunately, only half of the public deficit during the pandemic was actually aid, the other half was just ordinary government debt spending, which was a significant stimulus to today’s inflationary pressures.
Lidovky.cz: and what about next year?
If it is not possible to sharply reduce the cost of running the state, there will be rather a debate about which taxes to raise or where to get additional funds.
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