State debt grows to CZK 1,668bn in 2012

Prague, Jan 10 (CTK) - The Czech Republic's state debt grew by Kc168bn to Kc1,668bn in 2012, and per capita debt amounted to almost Kc159,000 at the end of the year, the Finance Ministry's spokesman Ondrej Jakob told CTK Thursday.

The state debt is the debt of the central government and is accrued by state budget deficit accumulation. It is financed by treasury bills, state bonds, direct loans and loans from the European Investment Bank (EIB), for example.

"The Czech Republic is still far from having stable public finances. Fiscal consolidation will have to continue. The question is when and how. The efforts at cutting deficit and the relatively good situation in comparison with a majority of other European countries nevertheless allows us to view the state debt less critically," Patria Finance chief economist David Marek said.

Net borrowing need increased to Kc172.8bn last year from Kc151bn in 2011. The difference between the state budget deficit, which amounted to Kc101bn in 2012, and the net borrowing need is to a large degree made up of an issue of reserve government bonds, the Finance Ministry said.

The reserve for the financing of the state debt doubled to around Kc140bn last year. Excluding the reserve, the state debt grew by Kc98.9bn in 2012, according to the ministry.

"We could take advantage of favourable conditions and create a sufficient 'cushion' as a precaution against a worsening of the situation on financial markets and unexpected turbulences," Finance Minister Miroslav Kalousek (TOP 09) said.

According to Marek, only time will show whether the effort to make use of advantageous conditions on the market was right. "The conditions may be even more advantagous this year," he added.

The Finance Ministry issued government bonds worth Kc164.4bn on the Czech market and bonds worth Kc69bn on markets abroad in the entire year 2012.

The ministry also issued government savings bonds worth Kc45.4bn and took out loans worth Kc4bn from the EIB. The money was used not only for borrowing needs, but also for the repayment of the state debt, buybacks and exchange of bonds before their original maturity date.

The growth of the state debt at end-2012 was in line with the Finance Ministry's estimate contained in the state debt financing and management strategy from December.

The ministry expects the debt to grow to Kc1,769bn at the end of 2013, to Kc1,859bn at end-2014 and to Kc1,938bn at end-2015.

Year State debt (in Kc billions)
1993 158.8
1994 157.3
1995 154.4
1996 155.2
1997 173.1
1998 194.7
1999 228.4
2000 289.3
2001 345.0
2002 395.9
2003 493.2
2004 592.9
2005 691.2
2006 802.5
2007 892.3
2008 999.5
2009 1,178.2
2010 1,344.1
2011 1,499.4
2012 1,667.6

Source: Finance Ministry