The Czech central budget deficit widened by 1.9% on the year to CZK 79.4bn (EUR 2.9bn) in the first 11 months of 2013, data from the finance ministry showed. The gap accounted for 79.4% of the full-year target suggesting that the government is on rack to beat the end-year deficit target of CZK 100bn. The deficit widened from CZK 47.7bn at end-October.

Total budget revenue in Jan-Nov edged up by 0.4% y/y to CZK 965.5bn, accounting for 88.3% of the annual target. Revenue from taxes increased by 1.5% y/y to CZK 489.4bn with VAT collection improving by a strong 10.6% y/y to CZK 202.2bn, while excise taxes declined by 3.9% y/y. The rise in VAT revenue was partially thanks to a 1pp rise in both VAT rates as of Jan 1. 

Budget expenditures ticked higher by 0.5% to CZK 1.04tn as of end-Nov, equalling to 87.6% of the annual plan.

In November alone, the budget produced a deficit of CZK 31.7bn, slightly up from a gap of CZK 26.6bn in the same month of 2012.

The government 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. In its latest macroeconomic forecast published in October, the finance ministry said it projects this year’s public sector deficit that includes the central government budget, regional and local budgets, public funds and public health insurance, to account for 2.9% of GDP and stay at that level in 2014.