State budget sees first surplus in over two decades

2016 was a very good year when it came to the state budget, which ended with a surplus of 61.8 billion crowns. The result is the best since the foundation of the Czech Republic in 1993. The last time revenues exceeded expenditures was in 1995 and the result is a feather in the cap for Finance Minister Andrej Babiš. But critics charge that the achievement could not be attributed to the minister alone, far from it.

Andrej Babiš, photo: CTK

The minister of finance, Andrej Babiš, presented the figures for the country’s economic performance in 2016 at a news conference in Prague on Tuesday afternoon. Some analysts say the positive results are in part due to a trimming of investments by some 70 billion crowns, while others argue that the state’s taxation rates are too high; the finance minister maintained that tax revenues were simply being handled more effectively; as for the European Union, he added, funds had been sent to sectors where they had been owed for 2015.

Economists point out that the factors which influenced the result were many. Opposition party leaders, such as Petr Fiala of the Civic Democrats, criticised the interpretation of the result on Twitter, saying that a high surplus did not mean good economic management. He reminded Twitter users that the government had not invested, had not made enough use of European funding, and had not lowered taxes.

Prime Minister Bohuslav Sobotka, meanwhile, suggested that the government as a whole had played a key role, not only better claiming EU funds but also prompting economic growth and improvement employment figures. He told Czech Radio that the funds saved should be rolled over to help lower the deficit this year:

“There is a chance that these funds could go towards lowering the deficit in 2017. I think that is a priority.”

Miroslav Kalousek, photo: Filip Jandourek

Long-time critic and rival to Andrej Babiš, the head of TOP 09 Miroslav Kalousek said that the surplus in last year’s budget was the result of extraordinary factors which he did not attribute to the current government:

“The surplus is the result of economic growth which the government cannot take credit for.”

He repeated the view that the government had failed to invest effectively, a view which echoed by Marek Černoch, the head of Dawn – National coalition, who said that the surplus had been paid for or bought by fewer investments, in infrastructure and transport. He suggested, as have others, that that would lead to problems in the future.