Czechs Seen on Track to Join Exclusive Budget Surplus Club in EUby
Czech Republic on track for ‘slight’ 2016 budget surplus
Germany, Luxembourg, Estonia had budget surpluses in 2015
The Czech government is on track to produce a “slight” public-finance surplus this year, central bank Governor Jiri Rusnok said, an achievement that would put the country in an exclusive group as most other European Union members face spending shortfalls.
The government in Prague is set for a fourth consecutive year of a better-than-planned budget balance, with economic growth, shrinking public investment and a fight against tax evasion setting the country up for its first surplus in more than two decades.
“We will definitely end the year with a public-finance surplus,” Rusnok said Monday in Prague. “We are in a situation where we even have a slight current account surplus. Overall it’s a rather remarkable result for an economy that’s still converging toward the world’s most developed economies.”
If borne out, the result will confound predictions earlier this year from economists and the Finance Ministry that the deficit would widen from 0.4 percent of gross domestic product in 2015. It will also put the country of 10.5 million in an elite club of EU countries including euro-zone members Germany, Luxembourg, and Estonia, which all posted public finance surpluses last year even as other countries in the bloc struggle to spur the recovery from the global financial crisis while trying to control public borrowing.
Budget revenue exceeded spending by 81.2 billion koruna ($3.4 billion) from January to August, compared with a 19.2 billion-koruna surplus a year earlier, according to the Finance Ministry. While government spending typically increases in the last months of the year, the country might end 2016 with a balanced budget, or even a surplus, compared with the planned 70 billion-koruna deficit, Komercni Banka AS said earlier this month.
The ministry, led by billionaire Andrej Babis, forecast this year’s deficit at 0.6 percent of GDP in January before cutting that to 0.3 percent in July.
Budget performance has been reducing the government’s borrowing needs, helping to compress the rate on 10-year bonds to a record low 0.26 percent earlier this month. The yield stood at 0.27 percent on Monday at 10:58 a.m. in Prague, compared with 0.53 percent at the end of last year.