PRAGUE, Aug 3 (Reuters) - The Czech central state budget
showed a 76.2 billion crown ($4.24 billion) deficit for
January-July, a reverse from a 9.27 billion surplus a year ago
and worse than a month ago.
The deficit has already grown to double the original
full-year target of 38.1 billion.
The government is aiming to keep the central budget gap
below 170 billion, and sees an overall public sector shortfall
of 5.5 percent of gross domestic product.
The Czech economy dropped by 3.4 percent both year-on-year
and quarter-on-quarter in the first three months of this year,
and the Finance Ministry forecasts a decline of 4.3 percent for
the entire 2009. <CZ/ECON17>
The original budget was built on a forecast, set a year ago,
of a 4.8 percent full-year growth.
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KEY POINTS:
(in CZK bln) 01-07/09 01-06/09 01-07/08
year-to-date balance -76.16 -68.26 +9.27
(For full table, double click on................[]
DETAILS:
- The budget in July alone showed a 7.9 billion crown deficit
compared to surplus of 14.9 billion a year ago.
- In the past years, central state budget deficits typically
fell from June into the summer months due to seasonal factors.
- January-July revenue was down 6.5 percent year-on-year, while
expenditure rose 7.2 percent.
- January-July revenue accounts for 52 percent of the annual
target. Overall expenditure for the period stands at 56.8
percent of the yearly plan.
- Tax and fee revenues fell by 11.1 percent year-on-year, due to
lower income from all main taxes -- corporate, private income as
vell as the value added tax and excise taxes. The budget had
forecast a 9.4 percent rise.
- Revenue from social insurance fell 6.4 percent, while social
payments including pensions rose by 8.1 percent.
- The central state budget is the biggest part of the overall
public sector finances.
- In its latest forecast released on July 22, the finance
ministry saw an overall public sector deficit of 5.5 percent of
gross domestic product (GDP) in 2009 under the EU-harmonised
ESA-95 fiscal rules.
COMMENTARY:
PAVEL SOBISEK, CHIEF ECONOMIST, UNICREDIT, PRAGUE
"It is tough to find anything positive in the budget
developments... The deficit is at a historic high after seven
months. We should not be surprised if the full-year gap is
around 170 billion.
"The facts speak in favour of a conservative approach to the
planning of public finance for the next year. A possible
economic recovery, when it comes, will translate into higher tax
revenue with a delay."
MIROSLAV FRAYER, ANALYST, KOMERCNI BANKA
"This figure is quite poor compared to a year ago... We will
see further deterioration the rest of this year, and will see
very bad figures next year due to less tax inflows to the state
budget. And also there is a quite big increase in social
spending. The budget will worsen and worsen."
"Next year the gap could be more than 200 billion crowns."
MARKET REACTION:
Czech crown a touch weaker at 25.70 to the euro <EURCZK=>
from 25.65.
LINKS:
- For recent stories on the budget, click on []
or [].
- For an overview of the Czech central government budget,
Reuters 3000 Xtra users can click on the ministry's website:
http://www.mfcr.cz
- For LIVE Czech economic data releases, click on <ECONCZ>
- Instant Views on other Czech data []
- Overview of Czech macroeconomic indicators []
- Key data releases in central Europe []
- For Czech money markets data click on <CZKVIEW>
- Czech money guide <CZK/1>
- Czech benchmark state bond prices <0#CZBMK=>
- Czech forward money market rates <CZKFRA>
(Writing by Jason Hovet)
