Page 62 - CE Outlook Regions 2023

4.0 Budget and debt outlook

4.1 Budget and debt - Czech Republic

The Czech budget for 2023 was approved by the Chamber of Deputies
in October and signed off by President Zeman in December with a
deficit of CZK295bn (€12bn), revenue of CZK1.93 trillion and expenses
of CZK2.22 trillion.

The state is calculating to collect CZK1.636tn from taxes and
CZK382bn on added value tax, which is CZK83bn more than it did for
last year. Some CZK200bn from the budget is expected to be used to
combat the soaring energy prices and costs of living and CZK859bn is
the cost of welfare support. CZK203bn is allocated for investments.
Salaries of state employees including police or teachers will amount to
CZk264bn.

Overall, the cabinet expects state debt to increase up to CZK3.075
trillion. Expenses to maintain the debt are expected to increase up to
CZK70bn.

The deficit has been decreasing compared to the 2022 budget, by
CZK80bn from the deficit of CZK375 which was approved in the course
of 2022. This follows huge budget deficits for 2021 and 2020 as the
public finances were stretched during the COVID-19 pandemic

Czechia’s public debt is well below the EU’s average of 41.9%, but the
country’s Supreme Audit Office warned in August that with a 4.2% y/y
increase Czechia also has one of the fastest-growing debts and one of
the slowest economic growths in the EU.

Despite the increasing expenditures, the European Commission
forecasts the budget deficit to continue to decrease from 5.1% of GDP
in 2021 to a projected 4.3% in 2022 and 4.1% in 2023. An increase in
expenditures in 2023, including the reimbursement of energy suppliers
for eventual losses resulting from capping of electricity and gas prices,
is “assumed to be covered by revenue from a windfall tax applied to the
largest energy companies and banks”.

4.2 Budget and debt - Estonia

Government debts of the Baltic states were increasing throughout 2022
and will continue to grow in 2023, with the European Commission likely
to intervene in their fiscal affairs, especially that of Lithuania.

62 CE Outlook 2023 www.intellinews.com