Business State undershoots 2015 budget deficit but critics economic with praise
The state budget in 2015 ended with a deficit of 62.8 billion crowns, which is 37.2 billion less than the approved deficit for the year, finance minister Andrej Babiš announced at a press conference on Tuesday. He added that it was the best budget result the country reached since 2008.
According to Mr Babiš, a significant improvement of the tax and customs authorities’ performance and ‘extremely good work’ in terms of drawing EU funds are the key factors behind the favourable results.
Another factor behind the lower deficit was economic recovery and reflected in higher tax collection including social insurance payments, the finance minister said.
Adjusted for the social security payments, tax revenues grew by 27 billion to 596.7 billion. State budget revenues increased by 100.7 billion crowns to 1,235 billion and expenditures stood at 1,297 billion, a jump of 85.7 billion compared with the previous year.
In his comment on the state budget deficit, Prime Minister Bohuslav Sobotka highlighted increased state investments into infrastructure.
“A number of measures of the current government together with the favourable economic situation in Europe and in the world contributed to the significant economic growth which puts us at the front in the EU,” he said.
However, opposition politicians don’t credit the lower state budget deficit as any result of the government’s good performance, but rather say it is riding accelerated economic growth and drawing of EU subsidies.
Miroslav Kalousek, former finance minister and TOP09 leader, said that tax collection has been lagging behind economic growth, adding that the state was also wasting money on its functioning. Mr Kalousek also argued that without the support of EU subsidies, the state budget results would be worse than in the previous year.
Richard Dolejš, the deputy chairman of the Communist Party, said that the finance minister has contributed hardly anything to the lower deficit, which according to him was achieved thanks to higher revenues from the EU and unexpectedly high economic growth.
As for the president Miloš Zeman, he said that despite being glad, he didn’t want to overestimate the figure, noting that continued drawing of money from the EU on the same levels as in 2015 might not be repeated.
Previously, Mr Zeman accused Prime Minister Sobotka’s government of failing to draw some 35 billion crowns of EU funds.
According to most economic analysts, the main reason behind the lower state budget deficit is higher growth of Czech economy rather than any savings by the government. They also agree that the budget deficit for 2016 should be lower than the envisaged 70 billion crowns.
Commenting on the favourable results, finance minister Babiš said the Czech Republic was at the beginning of the road to a balanced budget and cuts in the country’s overall debt.