Finance Minister Alena Schillerová met with President Miloš Zeman and his
team of financial advisors at Lany Chateau on Sunday to brief them about
the 2020 draft budget.
She said that while she saw no means of reducing the proposed 40 billion crown deficit she was determined not to exceed this limit.
Ministers for the Social Democratic Party failed to support the draft in a Cabinet vote arguing that the budget proposal failed to take into account all their program priorities.
The opposition Communist Party, which tolerates the minority government in exchange for certain policy program concessions, has said it wants to see the deficit slashed by ten billion.
Czech municipalities have become adept at managing their finances, suggests a study carried out by credit rating agency CRIF and cited by the news website iDnes.cz. The country’s local authorities as a whole have been in the black for the last eight years and no less than CZK 125 billion crowns lies in their collective bank accounts.
The government has approved a draft state budget for 2020 envisaging a
deficit of CZK 40 billion. The same level of deficit is also expected in
the following two years under the plan produced by the minister of finance,
Alena Schillerová. She said a priority of next year’s budget would be
increasing old aged pensions as well as teachers’ salaries.
Junior coalition partners the Social Democrats abstained from the vote, saying the budget was insufficiently generous to those most in need.
The draft budget is subject to change and Ms. Schillerová will hold consultations on it with other cabinet members through the summer.
The Communist Party, which supports the minority government on key votes, is demanding a maximum deficit of CZK 30 billion next year.
The Ministry of Defence is looking to spend nearly 1 billion crowns to
replace the country’s ageing fleet of tanks and 2.3 billion crowns to buy
two military transport aircraft.
Minister of Defence Lubomír Metnar is expected to present details to the government on Monday about the proposed purchases.
The MoD wants to buy 33 tanks of the T-72M4CZ variety, an upgraded Czech version of the Soviet-made T-72 battle tanks, and two new CASA C-295MW transport aircraft. The order price includes spare parts and training.
The possible introduction of a sector tax on banks in the Czech Republic would lead to a knock-on increase in the cost of financial products, according to an analysis conducted by the Centre for Economic and Market Analyses (CETA) published on Tuesday. This would mainly concern higher mortgage rates and more expensive loans for entrepreneurs, the study found.
A Finance Ministry proposal for next year’s budget, which is to be
debated by the government next week, sets next year’s deficit at 40
billion crowns, Prime Minister Andrej Babiš announced at a press
conference on Monday.
The draft budget forecasts state expenditures of 1.59 trillion crowns and revenues at 1.55 trillion crowns. According to Mr Babiš, the budget plan also envisages a hike in public sector wages and higher pensions. The first draft budget proposal is to be presented to the lower house on May 31.
The Czech National Bank has lowered its forecast for the development of
public finances in 2019 and 2020, in its Inflation Reports summary
published on Friday. The bank now expects a surplus of 0.3 percent of GDP
in 2019, as opposed to February’s more optimistic estimate of 1.2
percent. The new expectations for 2020 have gone down even more sharply
from February’s 1.3 percent to the current forecast of 0.2 percent. This
year, public debt is expected to sink from 32.7 percent of GDP to 30.9
percent. Next year, a further decrease to 29.3 percent forecast.
In a prognosis released on Thursday, the bank also lowered the country’s economic growth projection to 2.5 percent in 2019 and 2.8 percent in 2020. A further decrease in the Czech crown’s exchange rate is also expected.
The Czech government aims to obtain much more revenue in taxation from the likes of Google and Facebook, Hospodářské noviny reported on Thursday. Under a planned new digital tax scheme, the huge multinationals would be forced to pay taxes in the place they make earnings, in this case the Czech Republic, the business daily said.