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Janota lost, state debt will be record high

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Finance Minister Eduard Janota came to terms with the fact that he will present the worst state budget in Czech history.

Hospodářské noviny got hold of the official version that Janota sent to all the parliamentary party leaders. The budget expects the deficit to reach a record CZK 231 billion and that, according to Janota, might later cause similar troubles Hungary underwent last year.

There is no time and willingness to introduce big changes. “It is the maximum of what is possible. There is no other budget that could be put together in the given situation,” Janota told HN on Monday.

Today, the minister will present the cabinet with a number of bills that might save CZK 70 billion next year. Janota suggests to increase the health and social insurance payments for the rich, higher VAT and higher excise tax on petrol, diesel, alcohol and cigarettes. The package also includes a number of cuts affecting health care system, pensions, social benefits and building savings accounts.

Janota’s reforms do not stand a chance, though, because of the elections. Only Miroslav Kalousek’s TOP 09 supports them and so they are not reflected in the official budget.

That is the reason why it is already clear that the payment of state debt interest will require CZK 68 billion next year. The overall state debt will reach the astronomical sum of CZK 1.35 trillion and so this year and next year it will increase by more than 0.1% of the GDP.

The budget deficit could have been even bigger. Janota’s budget is expecting to cancel 20,000 positions in the state service. He also froze public servants’ salaries and cut down the ministries’ expenses. Some CZK 4.5 billion less has been earmarked for salaries next year than this year, though there is still enough money for higher pensions.

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