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Zeman signs 2016 state budget with deficit of CZK 70 billion

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Prague, Dec 17 (CTK) – Czech President Milos Zeman signed on Thursday the 2016 state budget with a projected deficit of 70 billion crowns, which is 30 billion less than the deficit approved for this year, his spokesman Jiri Ovcacek has announced.

The budget expenditures are put at 1,251 billion crowns and revenues at 1,181 billion crowns. The government envisages an economic growth of 2.5 percent and an average growth of consumer prices of 1.5 percent.

The rightist opposition and some economists say the deficit is too high.

Finance Minister Andrej Babis (ANO) defended the deficit in the Chamber of Deputies saying it is a compromise based on what is possible and that some proposed an even higher deficit of up to 85 billion crowns.

“I am convinced that the budget will boost economic growth and employment,” Prime Minister Bohuslav Sobotka (Social Democrats, CSSD) said after lawmakers passed the bill earlier this month.

Babis also said the deficit is a pro-growth one and that it is anti-cycle, responsible, it provides for investments and motivates consumption.

The right also criticised the government for taking on too many civil servants, which requires a lot of money for their salaries.

According to the budget bill, 13,329 new civil servants will be employed, which will raise the total number to 437,291.

The expenditure on the pay of civil servants will rise by almost ten billion crowns to a total of 149.1 billion crowns.

Babis justified this by that the state needs teachers, soldiers and police and that it also needs tax offices´ staff to better collect taxes.

During the third and final reading of the budget, lawmakers made some transfers between individual budget chapters. They added 200 million crowns to universities and shifted another 250 million crowns in support of sport.

They also approved the transfer of 600 million crowns to pensions in connection with the approved one-off bonus of 1200 crowns to pensioners next year.

It is to make for a low pension indexation next year that is due to a low inflation to which the indexation is tied.

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