Notification of government deficit and debt - 2019 (Second notification, data sent to Eurostat)

For the year 2019, the balance of the general government sector ended up with a surplus in the amount of CZK 15.3 billion; expressed as a percentage of the GDP, the surplus corresponds to 0.27% of the GDP. Compared to the first notifications, the surplus decreased by CZK 0.1 bn. At the end of 2019, the general government debt dropped by 1.85 percentage points (p. p.), year-on-year (y-o-y), to 30.21% of the GDP. The mentioned fiscal data serving to an assessment of how the Maastricht convergence criteria are met were sent to the European Commission within the second notifications in 2020.

The balance of the general government sector in 2018 has been revised compared to the first notifications by CZK 0.1 bn. The revision of the balance was caused mainly by updated data on tax income (CZK +2.0 bn) and expenditure excluded from EU funding (CZK -1.1 bn). Aside from that, the balance was revised due to new information from annual statistical questionnaires (CZK -1.1 bn). Following the benchmark revision of national accounts indicators for the period 2016 – 2019 have been revised accordingly whereas a change in the Maastricht criteria is mainly caused the revision of nominal gross domestic product.

Table 1: Notification table of government deficit and debt, the Czech Republic, 2016–2019

According to the revised data, the total general government revenue increased in 2019 by 6.4%, y-o-y; it was an increase by CZK 144.0 bn. All types of revenues increased with the exception of property income, which dropped by CZK 2.6 bn (−7.4%). Revenues from social contributions increased the most (+61.2 bn or 7.3%), taxes on production and imports (+41.2 bn or 6.4%), and income taxes (+26.2 bn or 5.7%).

The total general government expenditure grew in 2019 by 8.1%, y-o-y; i.e. by CZK 178.1 bn. The following increased the most: social contribution (+66.4 bn or 8.1%), compensation of employees paid (+54.9 bn or 10.5%), and gross capital formation expenditure (+30.7 bn or 13.4%).

In the end of 2019, the general government debt reached 30.21% of the GDP. In the year-on-year comparison, the government debt ratio declined by 1.85% p. p. It was contributed to only by the increasing nominal GDP (+1.92 p. p.), while the nominal amount of the debt increased by CZK 3.9 bn. In the end of 2019, the general government debt reached CZK 1 738.5 bn; 91.8% of it consisted of issued debt securities the volume of which increased by CZK 41.8 bn, y-o-y, while the value of received loans dropped by CZK 34.4 bn. The volume of received deposits decreased by CZK 3.5 bn to CZK 5.1 bn.

Indicators presented in the table 1 were transmitted to Eurostat on 30 September 2020.

Notes:
Notification of government deficit and debt is compiled always for the past four years and submitted to the European Commission by each Member State of the European Union always at the end of March and September each year, including a projection for the current year. The projection for the current year is compiled and published by the Ministry of Finance of the Czech Republic. Quantification of fiscal indicators is based on the ESA 2010 methodology. Pursuant to the Maastricht criteria, the government deficit must not exceed 3% of the GDP and the level of the accumulated government debt must not exceed 60% of the GDP.

Government surplus/deficit is represented by the item B.9 “net borrowing (−) or net lending (+)” in the system of national accounts. The indicator refers to the ability of the general government sector in the given year to finance other sectors of the economy (+) or the need of the general government sector to be financed (−) by other sectors.

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