Czech FinMin plans state budget with Kc100bn deficit next year


31.03.2014 12:08

Prague - The Czech Finance Ministry has prepared a state budget with a Kc100bn deficit for 2015, the ministry told CTK today.


Budova Ministerstva financí České republiky v Letenské ulici v Praze. ČTK Černý Jan, ČTK

Finance Minister Andrej Babis (ANO) said on Sunday the ministry had already prepared a budget draft whose deficit should not exceed 3 percent of gross domestic product (GDP). The ministry will present detailed parameters of the budget to coalition partners on April 9.

A budget with a Kc112bn deficit has been approved for this year.

"We want to reduce the state's operating expenses," Babis told radio station Frekvence 1 on Sunday.

Work within various kinds of external contracts for consulting and legal services, for example, could be done at the ministry, Babis said.

"We of course want to raise pensions, we would like to increase wages of state employees, we need to build motorways and repair them, and we need money for investments. And the state's operating costs can certainly be cut dramatically," Babis said.

Babis said last week the state could obtain more money in dividends from majority state-owned utility CEZ.

CEZ could pay last year's entire profit in dividends to shareholders, according to Babis.

This means the state could receive around Kc25bn in the dividends, which is about Kc10bn more than it obtained in the previous years.

The Ministry of Labour and Social Affairs proposed in the middle of March that pensions be increased by 1.3 percent as of January 2015, which would mean the state would pay Kc3bn more in pensions.

According to the current legislation, pensions would be indexed by only 0.5 percent next year.

When indexing pensions, price growth accounts for only one-third of the increase. But the government wants to raise this share to 100 percent.

The government has put the proposal to change the conditions of pension indexation in its policy statement.

The government has pledged in the statement to comply with euro adoption criteria, above all with the 3 percent limit for the public finance deficit, for the entire period it will be in office.

It also wants to change the law on budget rules and the rules for drawing subsidies from EU funds, and to improve collection of taxes.

When preparing the budget for next year, the government wants to make cuts mainly in operating expenses. It wants to limit above all outsourcing of legal services, marketing and consulting.

"Moreover, it will be necessary to check mandatory and quasi-mandatory state budget expenses," the policy statement says.

Defence Minister Martin Stropnicky (ANO) has recently said the Defence Ministry's budget for 2015 will not differ much from this year's budget. The ministry's expenditures are to reach Kc43bn this year.

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