Notifications of the government deficit and debt
Notification of government deficit and debt
The notification of government deficit and debt is compiled for past four years as a rule and submitted by each member state of the EU twice a year, regularly at the close of March and September, including a projection for the current year. The calculation of the aggregates requested relies on the methodology of the European system of national accounts (ESA 95). Pursuant to the Maastricht criteria, the deficit and the cumulated debt should not exceed 3% of GDP and 60% of GDP, respectively.
Unit | Year | ||||
2002 | 2003 | 2004 | 2005 | ||
| Net borrowing (deficit) of general government (in current year) | CZK bn | -166 787 | -170 558 | -80 559 | -107 637 |
| General government consolidated gross debt (at end of year) | CZK bn | 702 324 | 774 989 | 855 102 | 903 494 |
| Gross domestic product (GDP) | CZK bn | 2 464 432 | 2 577 110 | 2 781 060 | 2 970 261 |
| General government deficit in % of GDP | % | 6,77 | 6,62 | 2,90 | 3,62 |
| General government debt in % of GDP | % | 28,50 | 30,07 | 30,75 | 30,42 |
The government deficit/surplus and the government debt reflect the financial performance of all institutional units classified to the general government sector – they are governmental departments, territorial self-governing units, some semi-budgetary (subsidized) organizations, state and other extra-budgetary funds (e.g. National Property Fund, Land Fund, Support and Guarantee Agricultural and Forestry Fund or Vine-grower Fund), Railway Infrastructure Administration, transformation institutions, public universities, and health insurance companies.
Government deficit/surplus – EDP B.9 - refers to net borrowing (-) or net lending (+) including interest on swap transactions. It shows the ability of the general government sector to finance other entities (+) or the need of the general government sector to be financed (-).
Government debt includes, by definition, liabilities of the general government sector resulting from currency emissions (not applicable to the CR), received deposits, issued securities other than shares (except for financial derivatives), and received loans.
The Czech Statistical Office compiles the requested indicators for past years (2002-2005 in this case). The data are gradually refined, depending on the compilation and major revisions of annual national accounts and on methodological changes stemming from adjustments to respective EU regulations. Besides, they reflect changes made in accordance with recommendations of Eurostat (laid down in the Government Deficit and Debt Manual), recommendations set out in the conclusions of the external mission or implemented during the process of compiling notifications.
The data shown in the table above were sent to Eurostat within the scope of the autumn EDP notification on 29 September 2006. In comparison with the spring notification 2006, the data are based on more detail information on government transactions. Revenue data have been specified, e.g., in the areas of tax revenue or revenue from capital transfers; expenditure data are specified in the areas of gross fixed capital formation, foreign debt cancellation, and interest, as the following table shows:
Explanation of the most important changes in indicators included in EDP notifications (in CZK million)
| EDP B.9 | Net borrowing(+)/lending(-) | Difference against notifications of 1 April |
| S.13 | General government | -30 942 |
| S.1311 | Central government | -22 264 |
| S.1313 | Local government | -9 311 |
| S.1314 | Social security funds | 633 |
| Most important changes in NA items of S.13 | Effect on EDP B.9 | Note | |
| EDP B.9 | General government | -30 942 | |
| D.2 (R) | Taxes on production and imports | -10 338 | Refined data of MF CR on VAT |
| D.413 (U) | Interest – from other sectors | -1 152 | Reclassified item of profit and loss statement of CKA (previously in the revaluation account without effect on deficit) |
| D.5 (R) | Current taxes on income, wealth, etc. | -4 252 | Refined data of MF CR on income taxes |
| D.51 (U) | Taxes on income | -767 | Newly submitted audited financial statements incl. taxes on income |
| P.51 | Gross fixed capital formation ( - ) | -13 872 | CZSO refined estimate based on annual statistical reports |
| P.52 | Changes in inventories ( - ) | -602 | CZSO refined estimate based on annual statistical reports |
| P.53 | Acquisitions less disposals of valuables ( - ) | -100 | CZSO refined estimate based on annual statistical reports |
| K.2 | Acquisitions less disposals of non-produced non-financial assets ( - ) | 1 594 | CZSO refined estimate based on annual statistical reports |
| D.9 | Capital transfers receivable ( + ) | 1 673 | EU subsidies and estimate of gratuitous transfers |
| D.993 | Other capital transfers – to other sectors (-) | -2 934 | Particularly effect of cancellation of Russian Federation’s debt based on new information (-2254) |
| D.631 (U) | Social benefits in kind | 410 | Refined estimate based on annual statistical reports and MF CR refinement of costs of health care paid by insurance corporations |
| D.72 (R) | Non-life insurance claims | -414 | Methodological adjustment and completing of source data from annual statistical reports |
| D.71 (U) | Net non-life insurance premiums | 185 | Methodological adjustment and completing of source data from annual statistical reports |
| D.39 (-R), D.51 (U), D.73, D.75… | Other | -373 | New data on drawing on capital funds to support insurance of farmers and inclusion of income taxes into costs of units |
The estimated levels of government deficit and debt in the March notifications for the previous year are always based in part on preliminary information combined with the application of extrapolation methods and expert guesses.
The Ministry of Finance is responsible for the projection of government deficit and debt for current year (now 2006) and also for its publication.
Statement of the European Commission can be expected in the second half of October 2006.
Prague, 2 October 2006