Czech government approves draft budget for 2015, deficit to stay within EU rules

By bne IntelliNews September 22, 2014

The Czech government approved on September 22 the draft budget for 2015 envisaging more investments to support the economy that is recovering from a record-long recession but at the same time keeping the deficit within EU rules. CTK news agency reported.

The budget sets a deficit limit of CZK 100bn (EUR 3.6bn), lower than the CZK 112bn approved for this year. However, better-than-expected budget revenue will lead to a smaller gap in 2014 at some CZK 90bn, Prime Minister Bohuslav Sobotka has said earlier. Thus, the government decided to raise public sector wages by up to 3.5% as of November instead of January 2015 as previously planned. The pay hike will cost the budget CZK 1bn this year.

Budget revenues should grow to CZK 1,119bn in 2015 from CZK 1,099bn in 2014 and expenditure is to reach CZK 1,219bn, up from CZK 1,211bn. Tax revenues, including social and health insurance, are planned at CZK 975.6bn next year, which is by 3.2% more than in 2014. Mandatory spending should go up by 1.6% CZK 714.7bn.

The budget sees the overall finance gap widening to 2.3% of the GDP in 2015 from 1.5% expected for 2014. The gap, however, will be stay the EU’s limit of 3%.

Next year’s budget is based on the finance ministry’s latest macroeconomic forecast from July that sees the economy expanding by 2.5% and inflation at 1.7% in 2015. 

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