Monday, 24 April 2017

Gov't parties do not agree on 2016 state budget surplus use

ČTK |
20 April 2017

Prague, April 19 (CTK) - The Czech government coalition council failed to agree on dividing the 2016 state budget surplus on Wednesday and the coalition parties' experts will on Thursday draft a compromise proposal for the cabinet's Monday meeting, Jaroslav Faltynek (ANO) has told journalists.

The government is comprised of the Social Democrats (CSSD), ANO and the Christian Democrats (KDU-CSL).

ANO, which is headed by Finance Minister Andrej Babis, proposes that the 62 billion crown surplus be used to cut the state debt.

Prime Minister Bohuslav Sobotka (CSSD) said his party's priority is to transfer the money to a reserve for further pension indexation.

"There is a reserve of 20 billion crowns on the pension account and now, it could rise to 80 billion crowns. It could be used for pension indexation," Sobotka said.

At the same time, he allowed for a discussion on using the money for investments as well.

"This mainly concerns investment programmes, where there is an excess of applications. This concerns, for instance, subsidies to heating up schools, old people's homes or the construction of water treatment plants. These things are prepared, but regions' participation is required. This, too, is one possible way [of using the budget surplus]," Sobotka said.

The junior government KDU-CSL proposes a compromise under which parts of the surplus would be used to lower the state debt, to make investments and to add to the pension system.

Government politicians discussed ways of using last year's state budget surplus at the beginning of the year already.

They must submit their decision to the Chamber of Deputies by the end of April.

Babis says the surplus does not materially exist, it is but an administrative act.

However, he said in January that the decision-making on its use will depend on the development of this year's budget.

The KDU-CSL previously proposed that a part of the surplus be invested in the construction of water treatment plants and in road repairs.

Sobotka also said on Wednesday the budget surplus is not in the form of real money.

"The Finance Ministry issued fewer state bonds to the amount of the surplus. If the government decided to use the money, the Finance Ministry would have to issue new bonds in the same amount," Sobotka said.

The surplus of the state budget rose to 4.7 billion crowns as from the end of March from 3.7 billion in February.

It stood at a record 43.6 billion crowns as of the end of March 2016.

The Finance Ministry ascribes the strong year-on-year decrease to less money received from the EU.

This year's budget was approved with a projected deficit of 60 billion crowns.

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