Business Big budget surplus turns into big headache
General satisfaction with the outcome of the 2016 budget, which ended with a surplus of 61.8 billion crowns, was short lived. Coalition parties are now embroiled in a heated argument on how the money should be used, with no compromise solution in sight.
The 2016 budget was approved with a 70 billion crown deficit, but saw a surplus of 61.8 billion crowns. Arguments over who should take the credit – whether it is the result of better tax collecting, the country’s steady economic growth and low unemployment or paradoxically, the government’s failure to invest in planned projects – have been replaced by squabbles over how the money should best be used.
Social Democrat Prime Minister Bohuslav Sobotka would like to see the surplus transferred to the pension system account to be used for pension payment and indexation in the years to come. The prime minister claims this would help rectify the problems caused by former governments in the 1990s who used money from the pension system for other purposes.
The Christian Democrats, the smallest party in government, would like part of the surplus to be spent on improving living conditions in the countryside, for building new water supply and water-treatment facilities, and building and maintaining roads. “Such investments are urgently needed. It is shameful for the country to have 200 municipalities that still lack a water piping system, a sewage system and a water treatment facility,” Agriculture Minister Marian Jurečka argued at Monday’s cabinet session.
Neither his not the prime minister’s proposal won backing outside their parties. Meanwhile, Finance Minister and ANO leader Andrej Babiš, pushed for the money to be used to reduce the state debt, quoting President Zeman’s words that the cabinet was fighting over money that was not in reality available. If you have a debt –anything saved goes to repaying it – the president noted.
The 61.8 billion crown surplus has thus turned into a coalition headache and for lack of consensus a decision on what should be done with it has had to be shelved. Finance Minister Babiš advised the coalition to postpone a decision until late March to see how the 2017 budget would develop. The deadline for the cabinet to make a decision and submit it to Parliament –where it may face new hurdles – is April 30.