Notification of government deficit and debt - 2017

Notification table of government deficit and debt, the Czech Republic, 2014-2017

Surplus of the general government sector grew annually by CZK 46.0 bn. In case of the central government institutions, the balance reached surplus (30.1 bn) first time in whole time series, with an annual change amounting to +50.1 bn. In case of the local government, a surplus decreased by 7.2 bn to CZK 42.4 bn. The balance of social security funds rose by almost 3.2 bn to CZK 8.0 bn.

Total government revenues increased annually by 6.5 percent. The annual growth in revenues was underpinned mainly by rising social contributions (8.0 percent), income taxes (7.9 percent) and taxes on products and imports (7.3 percent). On the revenue side, a drop was registered in primary incomes (-18.1 percent), especially in case of dividends and interests, and capital transfers (-2.0 percent).

Total expenditures of the general government sector grew by 4.2 percent on a year-on-year basis. The highest annual growth was registered in expenditures on gross capital formation (10.7 percent) and compensation to employees (10.2 percent). On the other hand, a decrease by 23.7 percent was recorded for capital transfers. Due to declining interest expenditures, the total amount of primary incomes paid by the general government sector declined by 14.3 percent annually.

Government balance in the previous years were revised due to a methodological change in the recording of revenues from sales of mobile phone licences, in line with the Eurostat guidance note released in March 2017. According to a newly applied approach, revenues from sale are evenly distributed over the period of validity of the licence instead of in the full amount in the year of sale. Impact of the revision in individual years is illustrated in the following table:

Impact of methodological change - revenue from mobile phone licences, 2014-2016

At the end of 2017, the Czech government´s gross consolidated debt reached 34.60 percent of GDP. Especially nominal growth in GDP contributed by 2.05 pp to the annual decline in the government debt ratio (-2.17 pp). In nominal terms, the government debt was reduced by CZK 5.7 bn contributing by 0.12 pp to declining government debt ratio. Concerning the structure of debt, the most significant drop was registered in long-term debt securities (CZK -30.1 bn). With the share of 89.1 percent in total debt, long-term debt securities still represent the major part of the government debt.  Decline was registered also in case of loans (CZK -12.4 bn) and On the other hand, the value of short-term debt securities grew annually by CZK 39.4 bn.

Indicators presented in the table were transmitted to Eurostat on March 30, 2018.

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Government surplus/deficit is represented by item B.9 “net borrowing (-) or net lending (+)” in national accounts. It refers to the ability of general government sector to finance other sectors (+) or the need of general government sector to be financed (-) by other economic sectors.

Government debt consists of liabilities of general government sector in form of currency and deposits, debt securities and loans. In case of foreign exchange debt instruments hedged against currency risk, value in CZK is obtained by means of contractual exchange rate.

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