In response to the devastating floods, the Czech Ministry of Finance is planning changes to the national budget. These adjustments, which include an increase in the deficit, are intended to address the financial consequences of the natural disaster.
The Ministry of Finance is preparing an adjustment to this year’s state budget to manage the financial impact of the floods, reports the news channel ČT24. According to Finance Minister Zbyněk Stanjura (ODS), the state budget deficit will increase by CZK 30 billion this year, reaching a total of CZK 282 billion. Expenditure is also expected to rise by CZK 10 billion next year, bringing the deficit to CZK 240 billion. The amendment to the budget and the next year’s budget are expected to be approved by the government next week.
Minister Stanjura emphasized that the CZK 30 billion figure for this year is considered the upper limit of the estimate. If the actual losses turn out to be lower, the deficit will be adjusted accordingly. “These estimates are preliminary and still being finalized. However, we have set a generous upper limit to avoid subsequent adjustments,” the minister explained.
Due to the additional expenditure, the state will exceed the budgetary frameworks for this and next year. However, according to Stanjura, Czech and European regulations allow such an overrun in the event of natural disasters. The minister ruled out a special tax to finance the flood damage. Instead, the state will issue additional bonds, the specifics of which have yet to be determined.
The chairman of the National Budget Council, Mojmír Hampl, explained that the adjustments to the state budget amount to around 0.4% of the gross domestic product. Therefore, the additional expenditure is not expected to have a dramatic impact on the stability of public finances, provided it remains a one-off.
