The Chamber of Deputies Has Approved a New Budget Deficit of Half a Trillion

Published: 22.02.2021 Related countries:  Sweden Sweden

Because of the support of the opposition Communist Party of the Czech Republic (KSČM), the state budget deficit in the year 2021 in the amount of 500 billion Czech crowns, was approved by the Czech Parliament.

KSČM party deputies decided to support the government. Both the proposal for an accelerated regime and the new budget have been passed. This was announced in advance by the party's chairman, Vojtěch Filip.

For the second year in a row, the Czech state budget has an approved record deficit of 500 billion crowns.

On Thursday, February 18th, in a state of legislative emergency, the Chamber of Deputies complied with the government's request to increase the original deficit of 320 billion czech crowns, which it voted in December.

The cabinet justifies the increase in the deficit of the Czech Republic mainly by the effects of the tax package, for example, the abolition of super-gross wages.

This change alone will reduce tax collection by up to one hundred billion czech crowns. The government has also prepared a proposal for a new compensatory bonus for entrepreneurs and additional spending to combat the covidu-19 pandemic. "We are among the countries with the lowest indebtedness and the best ratings. It is our duty to take advantage of this excellent situation," said Finance Minister Alena Schillerová (YES party).

Both the proposal for an accelerated regime and the new budget have passed. This was announced in advance by the party's chairman, Vojtěch Filip. "We will approve the change. I am convinced that this is a step that means a responsible approach that citizens demand of us," said Filip.

According to economists, such a large budget deficit is not justifiable. According to them, the current economic situation and the latest estimates of economic development would justify a deficit of around 400 billion czech crowns.

Komerční banka economist František Táborský stated that increasing the state budget deficit is unnecessary. "Last year the government failed to spend the approved framework and this year it will be the same case," the economist quoted the Czech News Agency as saying.

Táborský added that the expenses associated with the pandemic will also be lower this year than last year. And also that the financial markets will react to a higher deficit, which will mean higher interest rates on loans that the Czech Republic will have to repay.

According to the approved proposal, the total budget revenues this year should be 1.39 trillion crowns and expenditures 1.89 trillion crowns. Revenues will be 103 billion lower than the original version and expenditures 77 billion crowns higher.

The Article has been presented by the employees of CzechTrade Stockholm.

Using the source: Ťopek, Martin. 19 February. Hospodářské noviny. Available at: https://archiv.ihned.cz/c1-66885640-novy-schodek-rozpoctu-je-pul--bilionu-prosel-s-pomoci-komunistu.