Notification of government deficit and debt - 2021 (First notification, data sent to Eurostat)

For the year 2021, the balance of the general government sector ended up with a deficit corresponding to 5.9% of the GDP. The general government sector debt in the end of the year 2021 reached 41.9% of the GDP while the year-on-year increase was by 4.2 percentage points (p. p.).

“The balance of the general government sector ended up with a deficit in the amount of CZK 359.4 bn and the amount of the debt reached 41.9% of the GDP,” Helena Houžvičková, Director of the Government and Financial Accounts Department of the CZSO, stated.

The largest share on the result continued to mainly belong to the balance of the central government that reached the deficit of CZK 385.0 bn. The local government sector balance ended up with the surplus of CZK 34.6 bn and the social security funds sub-sector (of health insurance companies) ended up with the deficit of CZK 9.0 bn.

Table 1: Notification table of government deficit and debt, the Czech Republic, 2018–2021

	Unit	Year
	Unit	2018	2019	2020	2021
Net borrowing/lending of general government	CZK mil.	48 292	16 709	-329 216	-359 398
General government consolidated gross debt	CZK mil.	1 734 602	1 740 263	2 149 268	2 566 587
Net borrowing/lending of general government as % of GDP	%	0.9	0.3	-5.8	-5.9
General government consolidated gross debt as % of GDP	%	32.1	30.1	37.7	41.9

The general government sector balance for the year 2020 has been revised by CZK 10.3 bn due to an increase of expenditure of health insurance companies based on updated accounting statements. Following a consultation with Eurostat, the methodology of capture of part of fees directing on the so-called nuclear account has been modified; the fees are not considered to be the revenue of the general government any more. The following table shows how this modification influenced the general government sector balance in 2018 to 2020:

Table. 2: Impact of revision in recording of nuclear account payments , 2018–2020

	Unit	2018	2019	2020
Impact on the balance	CZK mil.	- 1 096	- 1 150	- 1 177

The total general government sector revenue increased in 2021 by 4.8%, y-o-y; in absolute terms, it was an increase by CZK 113.4 bn. Revenues from social contributions and from taxes on production and imports were increasing the most. The biggest decrease was recorded for income taxes.

The total general government sector expenditure increased in 2021 by 5.3%, y-o-y; i.e. by CZK 143.5 bn. The highest increase was recorded for social benefits paid, compensation of employees paid, and subsidies, payable.

In the end of 2021, the relative debt of the general government reached 41.9% of the GDP. In the year-on-year comparison, the relative debt increased by 4.2 p. p. An increase in the nominal GDP contributed to a decrease of the relative amount of the debt (-2.6 p. p.), whereas the nominal amount of the debt increased in relation to the GDP by 6.8 p. p..

In the end of 2021, the general government debt reached CZK 2 566.6 bn; major part of it consists of issued debt securities the volume of which increased by CZK 346.1 bn, y-o-y.

Indicators presented in the Table 1 were transmitted to Eurostat on 31 March 2022.

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 and serves the assessment of how the Maastricht convergence criteria are complied with. 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.

Responsible head at the CZSO: Helena Houžvičková, Director of the Government and Financial Accounts Department, phone: (+420) 704 688 734, e-mail: helena.houzvickova@czso.cz
Contact person: Jaroslav Kahoun, Head of the Government Accounts Unit, phone: (+420) 274 054 232, e-mail: jaroslav.kahoun@czso.cz
Next News Release will be published on: 22 April 2022