Notifications of the government deficit and debt

Notification of government deficit and debt

The notification of government deficit and debt is compiled for the 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.



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. Land Fund, Support and Guarantee Agricultural and Forestry Fund or Vine-grower Fund), Railway Infrastructure Administration, transformation institutions (Czech Consolidation Agency etc), 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 data released on 1 October are corrected on the basis of Eurostat decision on methodological modifications in the classification of financial transactions in 2004–2006. Government property contribution to semi-budgetary organisations classified to the public non-financial corporations sector is regarded as capital transfer with impact on government deficit. Eurostat did not yet accept tax calculation from value added as made by the Czech Statistical Office for 2006. Following agreement with the Ministry of Finance, the CZSO accepted the request of Eurostat to reduce the accrualised VAT by CZK 5.9 billion. The way of calculation used will be subject to a detailed analysis in cooperation with the Ministry of Finance CR and Eurostat and the results will be reflected in notifications of spring 2008. Due to the above reasons the government deficit in 2006 increased, compared to the figure released on 1 October, from 2.69% to 2.94%.

The projection of government deficit and debt for the year 2007 prepared by the Ministry of Finance was adjusted accordingly; it is published separately by MoF.


Prague, 22 October 2007