The CNB worsened its estimate of both public finances and debt

Updates: 06.05.2022 09:03

Prague – The Czech National Bank expects the general government deficit to fall to 5.2 percent of gross domestic product (GDP) this year from 5.9 percent last year. The deficit is expected to fall further to 4.5 percent next year. Contrary to previous estimates, the bank worsened the estimate, expecting a deficit of 4.1 percent in February this year and 3.9 percent in 2023. This follows from the table of key macroeconomic indicators published today, which are part of the current monetary policy report. The CNB will publish the full report on Friday 13 May.

According to CNB estimates, total government debt should rise from 41.9 percent of GDP last year to 44.2 percent this year and 46 percent next year. In February, the central bank expected 42.8 percent of GDP this year and 44.6 percent next year.

The deterioration in the estimate is related, among other things, to a significant reduction in the estimate of economic growth this year. In the forecast presented by the CNB on Thursday, the economy expects growth of only 0.8 percent this year. In February, estimates expected the Czech economy to grow by 3%. At the same time, the CNB significantly worsened the estimate of inflation, which is now waiting for an average of 13.1 percent this year.

In its April forecast, the Ministry of Finance expects the public finance deficit to fall to 4.5 percent of GDP this year. The deficit should decline in the coming years. According to the Ministry of Finance (MF), public finance debt should rise to 42.7 percent of GDP by the end of this year. The Ministry of Finance expects economic growth of 1.2 percent and inflation of 12.3 percent this year.

EU rules normally require a deficit below three percent of GDP and a debt below 60 percent of GDP. However, the European Commission suspended the rules last March in order to support the economies affected by the anti-pandemic measures and announced their return last year until the beginning of 2023.

The balance of public finances is calculated from the difference between revenues and expenditures of ministries and other state authorities, cities and municipalities, selected contributory organizations, state and other extra-budgetary funds and companies, public universities, public research institutes, health insurance companies, health insurance associations and unions and the Center. interstate payments.

Source: České noviny – hlavní události by

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