At the end of August, the state budget deficit increased to CZK230.3bn (€8.7bn), up by CZK25.2bn from July’s CZK205.1bn, which already was the highest debt recorded in the country’s history, the Czech Ministry of Finance said in a report on September 1. 

For the same period last year, the deficit amounted to CZK15.4bn. According to economists, the budget figures at the end of August show that the deficit for 2020 should be lower than planned. They estimate it to amount to CZK400bn-450bn. 

“Despite better-than-expected developments in the last two months, the state budget is heading for the worst result in history. However, the August figures confirmed the previous trend of lower revenue shortfalls and lower state budget expenditures than projected by the government. This is one of the reasons why we do not expect the state budget to reach a deficit of CZK500bn in the coming months,” Komercni Banka economist Frantisek Taborsky told the Czech News Agency.

“Assuming that there is no second wave of the [coronavirus] pandemic, the pressure on the state budget should gradually decrease for the rest of the year," said Raiffeisenbank analyst Vit Hradil. 

The National Budget Council, in its regular quarterly report, criticised the state’s budget deficit increase. According to the council, the development of the state budget and the economy in recent months confirmed that growth of the deficit to CZK500bn was “premature, unjustified and excessive”. 

The council claims the current budgetary policy will not ensure the use of public funds borrowed by the government on the capital markets with the maximum effect on supporting demand. It claims instead to see targeted measures that are unrelated to the COVID-19 pandemic.