Czech budget gap shrinks 47% y/y in Jan-Sept on higher VAT collection, EU inflows

By bne IntelliNews October 2, 2013

The Czech central budget deficit shrank by 46.7% on the year to CZK 38.2bn (EUR 1.5bn) in the first nine months of 2013 thanks to higher revenue from value added tax and EU funds, data from the finance ministry showed. The end-Sept deficit was the best result since 2008 and accounted for 38.2% of the full-year target suggesting that the government will likely be able to exceed the end-year deficit target of CZK 100bn. The gap, however, widened from CZK 36.21bn at end-August.

Total budget revenue in Jan-Sept 2013 grew by 6.5% y/y to CZK 806.4bn, accounting for 74.4% of the annual target. Revenue from taxes edged up by 1% y/y as VAT collection improved by 10.4% y/y to CZK 158.3bn, while excise taxes declined by 3.6% y/y. The rise in VAT revenue was partially thanks to a 1pp rise in both VAT rates as of Jan 1. Income from EU funds rose by CZK 29.8bn in the period. The revenue growth was also supported by a CZK 10bn transfer from a privatisation fund to cover a deficit in the pension system.

Budget expenditures also increased but at the much slower annual pace of 1.9% to CZK 844.7bn as of end-Sept, equalling to 71.3% of the annual plan.

In early September, PM Jiri Rusnok said he expects this year’s budget deficit to be smaller than the approved CZK 100bn thanks to higher inflows from the EU and better-than-expected VAT collection. The government targets the overall public sector deficit, including the central government budget, regional and local budgets, public funds and public health insurance, to account for 2.8% of GDP in 2013. It is forecast to slightly widen to 2.9% in 2014.

Central budget (CZK mn)          
  Jan-Sept 2013 Jan-Sept 2012 Change (%, y/y) 2013 adjusted budget plan Relation to plan
Revenues 806,42 757,14 6,5% 1 084,03 74,4%
Tax revenues (without contributions) 400,03 396,13 1,0% 554,23 72,2%
VAT 158,27 143,4 10,4% 212,00 49,2%
Excise tax 97,09 100,72 -3,6% 142,2 68,3%
Social and health insurance 276,32 277,31 -0,4% 377,77 73,1%
Expenditure 844,66 828,56 1,9% 1 184,03 71,3%
Social benefits 358,39 355,15 0,9% 495,63 72,3%
Pensions 278,47 280,8 -0,8% 389,76 71,4%
Own payments to EU budget 31,83 28,53 11,6% 36,00 88,4%
Capital expenditures 58,55 70,09 -16,5% 102,92 56,9%
Balance -38,24 -71,72 -46,7% -100,00 38,2%
Source: Finance ministry

Related Articles

Central European banks eye south-eastern expansion

Banking merger and acquisition (M&A) activity in Central Europe is likely to be further limited by the upturn in the region’s economies, industry sources said in comments published on May 29. ... more

Hungarian PM's "proxy" moves into the nuclear industry as Paks tenders approach

Firms controlled by Hungarian oligarch Lorinc Meszaros have purchased a 51% stake in the Hungarian subsidiary of Czech nuclear ... more

Czech PM accepts new nominee for finance minister

Reducing the political tension in the country a little, Czech Prime Minister Bohuslav Sobotka accepted on May 17 the nomination of a new finance minister from coalition partner Ano. Meanwhile, ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss