The state budget deficit fell to 183 billion at the end of June

Milan Malíček

The state budget deficit at the end of June fell to CZK 183 billion from CZK 189.3 billion in May. The budget posted a deficit of CZK 265.1 billion at the end of June, the worst June result since the Czech Republic was founded, the Finance Ministry said on Friday.

Finance Minister Zbyněk Stanjura (ODS) wants the deficit to be below CZK 330 billion in the upcoming amendment to the state budget for this year. Currently, the budget is approved with a shortage of CZK 280 billion. The minister will submit the budget amendment to the government in July.

At the end of June, total budget revenues rose by 74.2 billion to 787 billion crowns year-on-year. Tax revenues, including social security contributions, increased by 80.5 billion crowns year-on-year to 694.8 billion crowns. Total budget expenditure fell by CZK 7.9 billion year-on-year to CZK 970 billion.

According to the MoF, the year-on-year improvement of the balance by CZK 82.1 billion was mainly due to minor restrictions on the expenditure side related to the course of this year’s and last year’s epidemics and the corresponding compensation at the beginning of the year. Tax revenues increased 19.3 percent year on year, which aided revenue growth.

Spending on teachers’ salaries

On the expenditure side, the traditionally essential items were the two-month advance on teachers’ holiday salaries of CZK 28.3 billion and the exceptionally indexed pensions, on which CZK 51.5 billion was paid.

Significant items contributed to revenue growth, especially value-added tax, insurance premiums, corporate income tax, and excise duties. By contrast, revenue from the European Union and financial mechanisms fell by EUR 4.5 billion. Moreover, the year-on-year comparison was distorted by last year’s income from the auction of frequencies (CZK 5.6 billion).

Current expenditure, despite increases in the minimum subsistence level, housing benefits, extraordinary valorization of all pensions or other social benefits, and spending related to solidarity aid to refugees, was mainly reduced by lower anti-epidemic assistance payments. On the other hand, capital expenditure exceeded last year’s actual by CZK 8.3 billion.