Finance Ministry: Czech government debt largest in history, supersedes CZK 2 trillion

The Czech Republic’s government debt rose to by CZK 516.7 billion to a total of 2.16 trillion crowns, the Ministry of Finance informed on Friday. It is the highest level ever in the history of the country. In June, the ministry’s financing strategy projected that government debt at the end of 2020 will lie at CZK 2.12 trillion.

The skyrocketing of debt is primarily the result of the ministry issuing bonds to cover for this year’s budget deficit, which has risen from the originally planned CZK 40 billion to CZK 500 billion mainly thanks to a combination of coronavirus related relief measures and investments.

The Ministry says the average yield of the bonds it has issued lies at around 1.15 percent per annum and informed on Friday that it has now covered 77 percent of the funds needed to finance the debt in the national currency, some CZK 533 billion.

The long-term bonds, issued in the first half of 2020 were mainly aimed at covering the deficit and paying for already existing bonds, most of which are scheduled to be paid in the second half of this year. According to the ministry this should lead to a lowering of the absolute size of government debt so that relative debt to GDP will not exceed the level reached in 2013, when that ratio was at its highest with 44.9 percent.