Czech cabinet approves 2020 budget bill with 40-billion-crown deficit

Prague, Sept 16 (CTK) – The Czech cabinet unanimously approved the 2020 draft state budget with a deficit of 40 billion crowns at its meeting also attended by President Milos Zeman today, the Government Office press department has announced.

The two government parties, ANO and the Social Democrats (CSSD), say the budget priorities are increases in pensions, teachers’ wages, the parental benefit and the state spending on research and development and on sports and investments.

The budget bill, drafted by the Finance Ministry, projects the total expenditures at 1,618 billion crowns and revenues at 1,578 billion.

A 40-billion-crown budget deficit is also preliminarily planned for 2021 and 2022.

The 2019 budget deficit, too, has been projected at 40 billion crowns, and it reached 15.4 billion at the end of August.

The law binds the government to approve a draft state budget and send it to the Chamber of Deputies by the end of September.

The opposition criticises the government for planning deficit budgets in the current period of economic growth.

“Unfortunately, the [new] budget keeps the trend of raising future risks. It ignores the fact of the long-term unsustainability of the pension and health systems and its investment activity is lower than during the [last economic] crisis,” said opposition TOP 09 deputies’ group chairman Miroslav Kalousek, who was finance minister in 2007-2009.

He said investments made up 2.8 percent of GDP in 2012 and they are to reach 2.5 percent of GDP next year.

In relation to GDP, the spending on science and research planned for 2020 is also lower. “This is a socialistic redistributive budget without any vision of the country’s modernisation or competitiveness,” Kalousek said about the 2020 budget bill.

On the other hand, the draft budget was supported by the trade unions and employers earlier today.

The unions said the budget, if approved by parliament, will boost the economic growth. According to the employers, it will ensure economic stability. Nevertheless, the employers disagree with the government’s plan to raise teachers’s wages by 10-percent.

On Friday, the coalition agreed on an increase in the monthly wages in the public sector as of 2020, with 1,500 crowns being added to each civil servant’s basic pay. Teachers are the only group with a planned percentage raising of wages.

The 2020 budget bill’s mandatory expenditures are to reach 885.1 billion crowns next year, which is a 7.3-percent increase as against 2019.

The mandatory spending on, for example, unemployment and social benefits or financial support for political parties, thus makes up over a half of the planned budget’s overall expenditures.

Monthly pensions are to rise by 900 crowns on average next year. The state plans to spend 509.4 billion crowns on pensions, 37 billion more than this year.

The parental benefit is to rise by 80,000 crowns to 300,000 next year.

The state tax revenues in 2020, including social insurance fees, are to increase by 6 percent, or 79.7 billion crowns, to 1,4 billion.

The compound tax quota is to rise to the record level since 2015 at least, to 35.9 percent. According to the Finance Ministry, an increase in the compound tax quota does not automatically mean an increase in the tax burden faced by the population.

($1=23.286 crowns)

rtj/dr/hol,kva