Czech economy sees record high budget surplus in first quarter
The budget surplus for the first quarter of this year was the highest in the history of the Czech Republic, reaching CZK 44 billion, according to figures released by the Ministry of Finance. The result has been attributed to a growth in tax revenues and transfers from the European Union.
The results for the period from the start of January to the end of March were better than analysts had expected. While expenditures went according to plan, revenues – particularly from taxes of various kinds – swelled the state coffers.
Total budget revenue for the first quarter reached CZK 342 billion while outgoings stood at just under CZK 299 billion.
The chief economist of Poštovní spořitelna, Jan Bureš, says the overall budget deficit for the year could be lower at the end of 2016 than originally envisaged.
“If the state wanted, it could in my view achieve a better balance than the CZK 70 billion that it reckoned with at the start of the year.”
However the record result for the first quarter does not have to mean that a high plus balance can be maintained until the end of December, says economist Pavel Sobíšek of UniCredit Bank.
“As we learned this morning, the state budget as a whole operated for the entirety of last year with a deficit of only 0.4 percent of gross domestic product. This year I would expect the opposite – that the deficit of the entire state budget, not just of central government, will grow in comparison with last year.”
Alongside tax revenues, another significant reason for the record budget surplus has been a growth in cash transfers from the European Union. They shot up by 19.3 percent in the first quarter to reach CZK 78.8 billion.
Economist Marek Dřímal of Komerční banka says this was primarily down to EU funds stemming from the 2007 to 2013 programme period.
Speaking to Czech Television, he warned that these monies should virtually dry up in the coming months, leaving tax revenues as the only means of filling the state coffers.
In addition, tax revenues may be higher year-on-year, but they are still falling behind the planned pace of collection, Mr. Dřímal said.
