The budget deficit is 210.7 billion after October. The development is positive, the windfall will help, says Stanjura

After October, the state budget runs a deficit of… billions. After September, the deficit was 180.7 billion crowns. Commenting on the results, Minister of Finance Zbyněk Stanjura (ODS) said that ongoing performance can be evaluated positively. “Compared to previous years, the budget will be positively affected by the December advance on the tax on unexpected profits,” said Stanjura. The total deficit for this year is approved at 295 billion crowns.

The year-on-year improvement of the balance by CZK 76.0 billion was significantly contributed in the course of the previous months by income from the European Union, mainly from the National Recovery Plan, the inclusion of income from the state’s equity participation in the joint-stock company ČEZ and the high collection of corporate income tax, reinforced by the income from extraordinary and temporary taxation, especially of energy companies.

According to the approved budget, this year the state should manage revenues of 1.93 trillion and expenses of 2.22 trillion crowns, the deficit should amount to 295 billion crowns. Finance Minister Stanjura has repeatedly expressed his belief that the planned deficit will be met, even if not exactly by a billion.

He repeated that now. “The continuous implementation of the budget for 10 months can be evaluated favorably. The state’s operating expenses are at 70 percent of the annual plan, and we will certainly save more than 10 billion here for the entire year. Together with other ongoing savings and a high collection of income taxes, we should maintain the planned annual deficit of around 295 billion,” said Finance Minister Zbyněk Stanjura.

“Corporate income tax collection has already exceeded the annual plan, the collection of personal income tax and the drawing of funds from the European Union are also developing favorably. These revenues more than offset the slightly weaker collection of consumption taxes and VAT influenced by lower household consumption. Compared to previous years, the budget will be positively affected by the December advance on tax on unexpected profits. The final result of the deficit will also depend on the absorption of investment and non-investment expenses from the ending period of co-financing of EU projects 2014-2020,” added the Minister of Finance.

During the year, experts warned that the deficit could not be sustained. Stanjura announced cuts of 20 billion during the year. Economists have been more optimistic in recent months, but continue to point to systemic problems. “Although the state budget has shown relatively decent results in recent months, it is in these months that the government is laying the foundations for massive indebtedness in the future. I will need to borrow for the construction of nuclear power plants, as well as for the ongoing nationalization of the energy industry.​​​​” said Deloitte analyst Václav Franče, for example.

The government finds itself under unnecessary pressure

The National Budget Council repeatedly draws attention to government fouls during this year’s budget creation. “Revenues were budgeted that were extremely unlikely to be met as approved. We were not happy about the fact that, on the contrary, expenses that were very likely to occur were not budgeted, that was the valorization of pensions,” said NRR head Mojmír Hampl at the end of September.

“The second problem is that there is an eclipse of the budgetary sphere by transferring money to extra-budgetary funds. Unfortunately, many people jumped on it and are constantly comparing the 295 billion deficit from this year with last year and so on,” said council member Jan Pavel, adding that it is always necessary to see the thirty billion that are stored in the extra-budgetary State Transport Infrastructure Fund. “And according to the reports we have, for example, from the steering committee, it will be again next year. This is highly problematic because public finances are supposed to be transparent,” said Pavel.

Hampl added that by breaking the rules, the government is unnecessarily under pressure. “Maybe it looks like we’re talking very abstractly, but that’s completely normal budgeting common sense. For those expenses that are uncertain, you should rather count on them to come. And for those incomes that are uncertain, you should rather count on them not coming. That’s just completely normal basic common sense,” Hampl said.

Last year, the budget ended with a deficit of 360.4 billion crowns. It was the third highest since 1993, with only the 2021 and 2020 budgets ending up with a larger deficit.