Government approves the amendment of the State Budget Law for 2022, increasing the deficit by CZK 50 billion
On July 27th, the Czech Government, led by Prime Minister Petr Fiala, discussed and approved the budget variance, which will increase the deficit by 50 billion crowns. This year, the state budget will be at a loss of 330 billion crowns.
“The revision of the draft state budget, with the aim of reducing unnecessary expenditure, had been prepared by the previous government of Andrej Babiš, and managed by our government already a few months after his appointment. At that time, we had reduced the deficit prepared by Andrej Babiš’s government by CZK 100 billion. We had no idea how useful these savings would be in the coming months. We could not have known that a few weeks later, a war would break out 300 km from our borders, which militarily is directed against Ukraine, but in the field of energy, economically and otherwise, is directed against the entire western world. Of course, this war has a direct and indirect impact on the Czech Republic, and it also has an impact on the state budget, and these are factors that the budget we originally approved could not take into account,’ the Prime Minister recalled.
The document envisages an increase in state expenditures by 115 billion kronor and another 51 billion, which the government plans to allocate to finance the energy-saving tariff next year. The government has used the increased spending mainly to help companies and citizens. Most of the increase is in social spending, with extra expenditures such as the 5,000 kroner bonus for families, the pension enhancement, savings tariffs, child allowances or the measures against high energy prices, which include the social tariff and the extraordinary coverage of incentives for renewables. Some spending in education and health will also increase due to the arrival of large numbers of Ukrainian war refugees.
Some of the increased spendings will be covered by increased revenue due to high inflation. Overall, the state expects an increase in revenue of 65 billion crowns. The government, however, has not planned any tax increases. The coalition parties have been arguing about this for weeks: part of the government bloc would like to introduce an extra levy on the profits of energy companies or revise the income tax on natural persons and legal entities; however, these proposals have not met with consensus among the majority parties.
The new state budget still has to be voted on by the Chamber of Deputies, where, however, no hiccups are expected as the government can count on a large majority.
Sources: https://www.vlada.cz/; https://www.camic.cz/
Sources of images: https://www.vlada.cz/; https://storyset.com/
