Comment: The truth about the budget. The deficit keeps growing

Comment: The truth about the budget. The deficit keeps growing
Comment: The truth about the budget. The deficit keeps growing
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At the very beginning of the program statement of Petr Fiala’s government, there is the sentence: “We want a state that does not live on debt.” Last May, the prime minister himself elaborated on it with the reflection: “The rate of indebtedness of the Czech Republic is threatening. If we couldn’t step on the brakes now, the situation would get out of hand in a few years,” he explained then why it is necessary to adopt an austerity package that increases taxes.

Not even a year has passed and the Czech Statistical Office found out that the braking effect had not yet appeared. It is true that the balance of the state treasury worsened a little less than in 2022 last year, which is why its administrator Zbyněk Stanjura could celebrate that he managed to reduce the deficit by a few tens of billions. However, more accurate calculations by statisticians, who also include the management of local governments and health insurance companies in the balance sheet, but mainly all liabilities and receivables, revealed beyond any doubt the exact opposite, namely that the fall of public finances accelerated.

For experts, this is not a big surprise, as evidenced by the fact that important public institutions expected the deterioration last year. There are even arguments that the Czech Republic fought against expensive energy by deepening the deficit, and these arguments are confirmed by the statistics that the state distributed large sums of money on social benefits, salaries of civil servants and subsidies to companies supplying electricity and gas. So now we are past the worst when it comes to energy prices and inflation in general. And this year’s budget will certainly turn out as the government promised…

The taxpayer may or may not believe this. However, the Supreme Audit Office takes the side of the skeptics. In the just-released annual report, it is recalled that over the past three years, the local state debt has grown the most in Europe, and the rate of borrowing failed to slow down last year either. Not even under the conditions that the state issued extraordinary taxes and thereby increased its revenues the most in history.

The crisis of state finances has not yet been resolved. Nevertheless, the government continues to bet on the fact that everything will come together when the austerity package, including the next increase in taxes, begins to work. He believes that there will be no need to proceed with a fundamental reform of the shattered budget.

The article is in Czech

Czechia

Tags: Comment truth budget deficit growing

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