Czechia on track to post first budget surplus in more than two decades claims CNB chief

By bne IntelliNews September 26, 2016

The Czech Republic is on track to post its first budget surplus in more than two decades this year, Jiri Rusnok, governor of the Czech Central Bank (CNB) suggested on September 26.

The government’s official target for 2016 envisages a deficit of 0.3% of economic output, or CZK70bn. Recent data, however, has seen the budget posting record surpluses.

Finance Minister Andrej Babis has suggested a balanced budget might be achieved this year. The finance minister, who recently pushed through a fiercely contested bill to introduce electronic cash registers, credits improved tax collection as the main factor behind the strong revenue growth that is driving the positive balance higher. However, he has refrained from predicting a surplus, with spending traditionally rising in the final months of the year, and has set a deficit target of CZK60bn for 2017.

Rusnok, who has no responsability for the budget, is more bullish. “We will definitely end the year with a public-finance surplus,” he said, according to Bloomberg. “We are in a situation where we even have a slight current account surplus. Overall it’s a rather remarkable result for an economy that’s still converging toward the world’s most developed economies.”

The budget produced a surplus of CZK81.2bn in the first eight months of 2016, the highest level at that point in the year since records began in 1993. Last week, the government approved the draft of the 2017 budget, which includes a target deficit of CZK60bn. While lower than the shortfall budgeted for this year, critics point out that the 2017 gap appears less than ambitious.

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