Czech budget deficit to rise from 40 to 200 billion with coronavirus measures

Prague, March 23 (CTK) – The Czech government today approved a rise in this year’ state budget gap from 40 to 200 billion crowns due to the economic impacts of coronavirus outbreak, the Finance Ministry said in a press release.

The new state budget bill is a response to the expected decrease in tax revenues while creating space for higher expenditures on the health of citizens, maintaining high employment and curbing the negative impacts on the economy and the social sphere.

The bill is to be debated by the Chamber of Deputies at its extraordinary session on Tuesday.

Total budget revenues are to reach 1,488 billion this year, down by 89.8 billion against the original plan. Expenditures, on the other hand, are to rise by 70.2 billion to 1,688 billion.

The main change on the side of expenditures is a 59.3 billion increase in the government’s budget reserves that can be used to address the impacts of the coronavirus crisis. Originally, the reserve contained 4.9 billion.

The bill also raises sickness insurance contributions by 10 billion and expenditures on state debt servicing by 5 billion from the original 43.8 billion.

The Finance Ministry plans to cover the budget gap mainly from the sale of government bonds.

In this regard, the Czech Republic’s situation is good thanks to its low debt level, Finance Minister Alena Schillerova said earlier.

The ministry plans to issue government bonds worth 33 billion in April. In December it planned to issue medium-term and long-term bonds worth at least 120 billion on the domestic market this year.

On the side of revenues, the ministry expects tax revenues to drop by 55.7 billion this year.

Revenues from social security payments are expected to decrease by 25 billion due to a relief programme for sole traders and slower growth of wages.

In addition, the budget cannot expect this year to receive revenues of 7 billion from the planned auction of frequences for 5G mobile networks.

The bill also envisages postponement of purchase of military equipment worth 2.9 billion and lowering of expenditures on compensations for fare discounts provided by bus and rail carriers to seniors and students by 1.5 billion.