Notifications of the government deficit and debt

Government deficit and government debt

On 23 October 2006, the Statistical Office of the European Communities (Eurostat) published, in the framework of EURO-INDICATORS (News Release No. 139/2006), data on government deficit and debt for every member state for the period 2002-2005. The data on the Czech Republic are the same as those the Czech Statistical Office published on its the web pages on 2 October 2006. There were no reservations on the part of Eurostat about the calculation of government deficit and debt performed by the CZSO. However, in compliance with the EU practice, the data for 2002-2005 now available should be taken as preliminary, because they may still be refined in the future. The Czech Republic is obliged to fulfil the next notification duty on 1 April 2007.

The time series 2002-2005 has been completed by data from 1995. The time series is based on revised National Accounts published by the CZSO in June 2006 and is comparable throughout.

	Unit	Year
	Unit	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005
Net borrowing (deficit) of general government (in current year)	CZK million	197 041	55 834	68 839	100 061	77 289	81 471	135 036	166 787	170 558	80 559	107 637
General government consolidated gross debt (at end of year)	CZK million	214 355	209 897	236 743	299 843	340 537	405 412	591 456	702 324	774 989	855 102	903 494
Gross domestic product (GDP)	CZK million	1 466 522	1 683 288	1 811 094	1 996 483	2 080 797	2 189 169	2 352 214	2 464 432	2 577 110	2 781 060	2 970 261
General government deficit in % of GDP	%	13.44	3.32	3.80	5.01	3.71	3.72	5.74	6.77	6.62	2.90	3.62
General government debt in % of GDP	%	14.62	12.47	13.07	15.02	16.37	18.52	25.14	28.50	30.07	30.75	30.42

The size and trend of government deficit are affected especially by tax revenues and general government revenues from social and health insurance (on the side of sources), and by current and capital expenditures (on the side of expenditures). Among the current expenditures are mainly social benefits, subsidies and costs of general government operation, among the capital expenditures then predominantly fixed assets acquisition, investment grants and also capital transfers. The last item was affected by a number of factors over the period of last ten years - gratuitous transfers of property (e.g. restitutions), transfers due to the economic transformation (specifically, in 1995 the second wave of voucher privatisation), costs of stabilisation and consolidation of the banking sector, transfers to households related to the sale of dwellings below the market price, called guarantees (debt assumption) for non-government units and cancellations of external debts (e.g. Syria in 2005). The government deficit is also influenced by the trend and fluctuation of deficit generated by the territorial self-governing units and social security funds (health insurance companies).

In previous ten years, government debt developed not only in terms of absolute figures (or from the point of view of debt tools used), but also with regard to its structure by sub-sector of general government. In 2001 and 2002, transformation institutions authorised to issue debt securities and accept loans (besides, the Czech Consolidation Agency still administers a certain amount of deposits) were reclassified from the sector of financial institutions to central government. Also the Railway Infrastructure Administration, which came into being by the split of the Czech Railways Company into two entities in 2002, has been classified to central government since 2003. Indebtedness of territorial self-governing units is on the steady increase too.