Czech caretaker govt approves 2014 draft budget with higher deficit.

By bne IntelliNews September 26, 2013

The Czech caretaker government of Jiri Rusnok approved on Sept 25 next year’s draft budget envisaging a deficit of CZK 112bn (EUR 4.3bn), up from CZK 100bn planned for this year but the overall public finance is seen staying below the EU’s limit of 3% of GDP, the government said on its website.

Budget revenue is projected at CZK 1.099tn, up from CZK 1.084tn expected for 2013. Expenditures are seen at CZK 1.211tn, higher than the CZK 1.184tn approved for this year. The previous centre-right government of Petr Necas that collapsed in June amid a bribery and spying scandal, had planned a deficit of CZK 105bn with CZK 17bn less in revenue and CZK 24bn less in spending, ex finance minister Miroslav Kalousek said.

Next year’s draft budget counts on an economic growth of 1.3%, higher than the originally expected growth of 0.8%.

Rusnok government was appointed by President Milos Zeman to replace Necas’ cabinet and should rule until a new government is formed after the October 25-26 early elections. Given that the new government, likely led by opinion poll-leading centre-left Social Democrats (CSSD) is formed quickly after the elections, it will be able to amend the 2014 budget draft before final approval in December. The government must submit the 2014 draft budget to parliament by end-September. Social Democrat Jan Mladek, a candidate for the next finance minister, said that the new government will likely amend the budget to include more funds for employment policies, investments and healthcare to reflect CSSD's priorities, Reuters reported.

According to the latest data from the finance ministry, the central budget deficit shrank by 46% on the year to CZK 36.21bn in the first eight months of 2013, accounting for 36.2% of the full-year target. Earlier this month, PM Jiri Rusnok said that this year’s budget deficit might to be smaller than the approved CZK 100bn (EUR 3.9bn) thanks to higher inflows from the EU and better-than-expected VAT collection.

Related Articles

Multilateral lender IIB to place its inaugural transaction in Czech koruna

Moscow-based development bank International Investment Bank (IIB) has priced its denominated private placement transaction with three-year floating rate notes in koruna of CZK501mn, the bank said in ... more

ArcelorMittal proposes to divest assets in Czech Republic, Macedonia and Romania

International steel and mining company ArcelorMittal said on April 13 it has proposed a divestment package to the European Commission in a bid to obtain approval for its planned acquisition of ... more

Finland gives final nod to construction of Nord Stream II

Finland has issued a second and final permit for the construction of the controversial Nord Stream II pipeline that is to pump gas from Russia directly to Germany via a Baltic Sea route, the Regional ... more