The deficit of the state budget of the Czech Republic in 2024 decreased by CZK 17.1 billion year-on-year to CZK 271.4 billion. Compared to the approved deficit, the budget showed an improved result by CZK 10.6 billion. For the third time in a row, the government of Prime Minister Petr Fiala not only kept the planned deficit, but also reduced it against the approved proposal. The year-on-year improvement in the balance reflects an increase in tax and insurance collections on the revenue side and moderate growth in total expenditure.
| State Budget 2023 Actual | State budget 2024 after changes | State budget 2024 reality | Year-on-year change (CZK billion) | % filling | |
| Revenue | 1914,1 | 1960,2 | 1965,4 | 51,3 | 100,3 |
| Expenditure | 2202,6 | 2242,2 | 2236,8 | 34,1 | 99,8 |
| Gap | 288,5 | 282 | 271,4 | -17,1 | 96,2 |
Budget revenue was CZK 5.2 billion higher than the approved budget, of which tax revenue exceeded the planned amount by CZK 8.3 billion and net tax revenue excluding social security contributions was CZK 11.9 billion higher. For example, the collection of personal income tax, excise duty on mineral oils and gambling tax was above the plan.
On the expenditure side, total and current expenditures did not reach the statutory limit by a unit of billions, while capital expenditures of CZK 210 billion exceeded the government's original plan by CZK 25.5 billion, mainly due to the inclusion of unspent entitlements from previous years.
We have been able to correctly anticipate economic developments, we have remained moderate in current expenditure, and we have met our budgetary commitments for the year. Zbyněk Stanjura, Minister for Finance
"We took over the government at a time when our country was going into debt at almost the fastest rate in Europe. We had to start rescuing public finances almost as soon as we were appointed. Despite the many crises we faced, we managed to make the necessary savings while at the same time securing record investment in roads, motorways, railways, defence and education. Our approach and budget performance over the last three years shows that budgetary discipline can be combined with strategic investment. And that is good stewardship - and that is the only way to prosperity and a good future for our country," said the Prime Minister of the Czech Republic Petr Fiala on the results of the financial year just ended.
"What pleases me as Minister of Finance is the fact that on both sides of the budget, both in terms of revenues and expenditures, the actual implementation of the budget at the end of the year differs from the approved plan only by tenths of a percentage point, or by low units of billions. In spite of the voices saying that we could not manage to stick to the deficit, the government has done it again. And I firmly believe that the balance sheet for this year will be the same. We have been able to correctly anticipate what the economic developments will be, we have remained moderate in current spending, we have met our budgetary commitments for the year, such as education, defence and social spending, and on top of that we have invested massively and had to cope with flood damage," added the Minister of Finance Zbyněk Stanjura.
The catastrophic floods in mid-September last year were the reason why the 2024 budget was amended at the beginning of October and its expenditure increased by CZK 30 billion to deal with flood damage. This increased the authorised budget deficit by the same amount to CZK 282 billion. Following the amendment to the 2024 State Budget Act, the flood expenditures strengthened the General Treasury Administration chapter, from where the Ministry of Finance sent CZK 15.4 billion to the various budget chapters. The largest share went to the SFDI for reconstruction of transport infrastructure (CZK 5.5 billion) and to the SFŽP for assistance to households after floods and reconstruction of water supply and sewerage networks (CZK 2.7 billion), to the Ministry of the Interior for programmes for reconstruction of property after floods (CZK 2 billion) or through the MLSA for social benefits and programmes (more than CZK 1.3 billion) and to the Ministry of Agriculture for mitigation of damage to state water property and forests.
State budget revenue:
Adjusted for revenue and expenditure on projects from the European Union and financial mechanisms The budget deficit amounted to CZK 287.4 billion and decreased by CZK 13.2 billion year-on-year.
State budget revenue increased by 2.7 % (+ CZK 51.3 billion) year-on-year in 2024 and were filled to 100.3 %. This was mainly driven by collections of insurance premiums (+9.2 %, CZK +63.4 billion) and tax revenues (+2.8 %, CZK +26.0 billion), which were also boosted by the change in the budget allocation of taxes (CZK +10.7 billion). Total tax revenue was thus fulfilled at 100.5 %. On the contrary, the balance was worsened by lower transfers of revenues from dividends and other state holdings (- CZK 27 billion) and lower funds received from the European Union and financial mechanisms (- CZK 14.3 billion).
Collection personal income tax on dependent activities (+15.6 %, + CZK 17.4 billion) was driven by wage growth in the economy and changes adopted in the adjustment package. These include, for example, the reduction of the threshold for the second tax rate or the adjustment of taxation of selected non-cash benefits. However, the effects of a number of measures will only be seen at the annual tax settlement, i.e. in 2025.
For collection corporate income tax (-5.3 %, -10.7 billion CZK), similar to the personal income taxes paid by taxpayers (+2.6 %, + CZK 0.2 billion) was affected by the tax settlement for the 2023 tax year due in 2024 and the advance payments. The year-on-year decrease in corporate tax collections was due to the high comparative base of 2023, which was increased by the tax settlement for the 2022 tax year. Advances in 2022 were paid according to the tax obligations for 2020 and 2021, but 2022 itself was an exceptionally profitable year, and therefore the tax settlement for 2022 was unusually high.
Collection windfall profits tax of CZK 36.7 billion (-6.3 %, CZK -2.5 billion) consists of the tax settlement for 2023 and the advance payment for 2024.
Contributions from social security contributions were increased last year by the reintroduction of employee sickness insurance at a rate of 0.6 %. The impact of this measure, which was intended to offset the deficit in the sickness insurance system, was approximately CZK 12 billion. The increase in the minimum assessment base for social insurance premiums for the self-employed also had a positive impact on collections. The volume of insurance premiums increased by 9.2 % year-on-year (+ CZK 63.4 billion).
Until collection value added tax (+4.5 %, + CZK 16.4 billion) reflected the growth in household consumption expenditure as well as the impact of the changes effective from January 2024, mainly the reduction in the number of tax rates to the basic 21 % and reduced 12 % and the shift of selected goods and services from the reduced to the basic VAT rate.
Collection excise and energy taxes (+9.8 %, + CZK 14.6 billion) increased mainly due to excise duties on mineral oils and tobacco products. The year-on-year growth in excise duty collections from mineral oils (+13.3 %, + CZK 9.9 billion) is due to the return of the excise tax rate on diesel fuel from 1 August 2023 to the original level at the beginning of 2022 (CZK 9.95/l from CZK 8.45/l). Development of excise duty collection from tobacco products (+7.1 %, CZK +3.8 billion) reflects the increase in the tax rate and the taxation of previously untaxed products. The year-on-year increase in tax collections on electricity, natural gas and solid fuels reflects the abolition of some exemptions. Excise duty collections on alcohol (-0.1 %) fell short of the expected increase due to the increase in the excise duty rate, which is probably related to the decline in consumption of hard alcohol. Excise duty collections on beer and wine did not show significant fluctuations compared to 2023.
State budget revenue for January-December
VAT - value added tax
SD - excise duties on mineral oils, tobacco products, including raw tobacco and heated tobacco products, beer, wine and intermediate products, alcohol, as well as energy taxes and the levy on electricity
DPPO - corporate income tax on returns and withholding
DPFO - personal income tax including employment tax, withholding tax and withholding tax
Extraordinary taxes - windfall tax and excess profits levy;
Insurance premiums - social security contributions and contributions to state employment policy. Excludes public health insurance premiums paid to health insurance companies
EU/FM - revenues from the European Union and financial mechanisms, which represent the already reimbursed EU/FM share of the financing of joint programmes with the Czech Republic
Other - adding to the total of tax and other non-tax revenue.
State budget expenditure:
Total expenditure increased by CZK 34.1 billion year-on-year (+1.6 %) and their implementation reached 99.8 %. Their pace was driven by current expenditure (+1.7 %, + CZK 34.5 billion), driven by pension insurance benefits (+ CZK 24.7 billion) and other social benefits (+ CZK 11.9 billion), transfers to state funds (+ CZK 21.3 billion), and transfers to other social benefits (+ CZK 11.9 billion). CZK), servicing of the state debt (CZK +20.1 billion), purchases by the Ministry of Defence (CZK +12.9 billion), payment of public health insurance for state insured persons (CZK +12.7 billion) and salaries of primary and secondary school employees (CZK +5.1 billion). On the contrary, the dynamics of current expenditure was reduced by the support provided in the energy sector (CZK -67.0 billion). According to preliminary data, capital expenditure reached almost last year's record level (CZK -0.3 billion).
On the most significant in volume social benefits (+4.2 %, + CZK 36.6 billion), pension payments contributed the most (+3.6 %, + CZK 24.7 billion). In addition to last year's extraordinary increase, their amount was affected by the January regular indexation by 1.8 %. The growing volume of care allowances (CZK +4.1 billion) was related to the increase in amounts following the change in the Social Services Act effective from July this year. Housing allowance (CZK +2.4 billion), unemployment benefits (CZK +2.4 billion) and sickness benefits (CZK +2.4 billion) also increased. The extraordinary immediate assistance in the last months of 2024 was increased by the claims of citizens affected by the September floods (+ CZK 0.5 billion). On the other hand, the payment of parental allowance fell (CZK -2.0 billion). The uptake of other benefits did not deviate from the standard trend in 2023.
Significant increase in non-investment subsidies state funds (+39.4 %, + CZK 21.3 billion) was determined by the funds provided to the State Agricultural Intervention Fund (+ CZK 10.3 billion), the State Fund for Transport Infrastructure (+ CZK 9.6 billion) and the State Environmental Fund (+ CZK 1.6 billion). The increase for the State Agricultural Intervention Fund was linked to the launch of the Common Agricultural Policy Strategic Plan for the period 2023-2027 and the possibility to pay higher advances to final beneficiaries.
Servicing the national debt represented an expenditure of CZK 88.5 billion for the state budget (+29.5 %, + CZK 20.1 billion). Adjusted for interest income from anti-inflationary government bonds, which were paid in the highest volumes in January 2023, the growth rate would be higher.
Increases in monthly plateb public health insurance for the so-called state insured from CZK 1,900 to CZK 2,085 led to an increase in the resources of the public health system from the state budget by CZK 12.7 billion (+9.2 %).
Routine purchases excluding servicing of the state debt increased by CZK 13.2 billion year-on-year (+16.1 %). The largest increase was attributable to the Ministry of Defence (+ CZK 12.9 billion), which was related to the acquisition of the F-35 multi-role supersonic aircraft (+ CZK 5.1 billion) and further development of the Czech Army's combat forces.
Behind the growth non-investment transfers to contributory and similar organisations CZK 3.4 billion (+3.9 %) was mainly due to the expenditure of the Ministry of Education, Youth and Sports (+3.5 billion CZK), reinforced by support for research, experimental development and innovation (+2.2 billion CZK) and contributions to universities (+1.3 billion CZK).
On the other hand, they dropped significantly current transfers to entrepreneurs (-51.7 %, - CZK 71.2 billion). A large part of their volume and decrease was related to subsidies to the energy sector (CZK -67.0 billion). Compensation for the supply of electricity and gas to customers and for losses due to capping their prices amounted to CZK 8.1 billion (CZK -44.7 billion) and subsidies to the transmission system operator amounted to CZK 1.3 billion (CZK -17.3 billion). Aid to companies in energy-intensive sectors is not paid this year (CZK -4.6 billion). Support for renewable energy sources, amounting to CZK 18.0 billion, fell by CZK 0.4 billion year-on-year. Among other transfers, support provided through joint programmes of the European Union and the Czech Republic decreased (CZK -4.4 billion), especially for the Operational Programme Enterprise and Innovation for Competitiveness 2014+ (CZK -4.9 billion).
Non-investment transfers to territorial budgets decreased year-on-year by 2.4 % (- CZK 6.3 billion). They include subsidies to regional education in the amount of CZK 206.0 billion (+ CZK 6.0 billion), including funds for salaries of teaching and non-teaching staff in primary and secondary schools. Expenditure on co-financing of social services (CZK 25 billion) increased slightly by CZK 0.1 billion year-on-year. The decrease in transfers was due to a lower involvement of funds from joint programmes with the European Union (- CZK 8.4 billion), such as the Jan Amos Komenský Operational Programme (- CZK 7.2 billion), a decreasing contribution to the accommodation of persons with temporary protection (CZK -5.1 billion) and last year's presidential elections (CZK -0.6 billion).
Own resources contributions to the EU budget decreased by CZK 7.1 billion year-on-year (-12.0 %).
Capital expenditure The volume of CZK 210.1 billion represented a volume comparable to the record year 2023. By involving mainly claims from unspent expenditure from previous years (CZK 59 billion), it was possible to significantly exceed the approved investment budget by CZK 25.5 billion. The high volume of state investments was achieved despite the fact that investments co-financed by the European Union decreased year-on-year as we were moving to the new multiannual financial perspective for the European Structural and Investment Funds in 2024. Investments were also significantly helped by the implementation of one of the government's priorities, which increased defence spending to 2 % of GDP. Most of the investments were made through national resources (+ CZK 17.4 billion), while the involvement of foreign funds decreased by CZK 17.7 billion. Investment purchases by the Ministry of Defence (+ CZK 36.8 billion) aimed at maintaining and developing the capabilities of the Czech Army grew the most. Transfers to universities (CZK +4.1 billion) increased due to the implementation of the projects of the National Reconstruction Plan, the Operational Programme Fair Transformation and the Operational Programme Jan Amos Komenský. The largest contributors to the decline were irregularly provided subsidies to the State Fund for Transport Infrastructure (CZK -8.2 billion), the State Environmental Fund (CZK -6.7 billion) and the State Agricultural Intervention Fund (CZK -1.8 billion). The lower volume of investments provided to municipalities and regions (CZK -5.1 billion) was not affected by national subsidies, which increased slightly year-on-year by CZK 0.4 billion.
State budget expenditure for January to December
Salaries - salaries and related expenses paid at the level of the organisational units of the state (i.e. excluding salaries paid in education, health, contributory organisations)
NT SS - non-investment transfers to private legal entities directed to business entities and non-profit and similar organisations (e.g. associations, foundations, institutes, charitable societies, churches, political parties and movements)
NT VRÚÚ - non-investment transfers to central government budgets, which include mainly public health insurance contributions on behalf of the state insured and transfers to state funds
NT ÚSC - non-investment transfers to territorial public budgets are largely represented by salary subsidies in regional education, transfers under the Social Services Act and the contribution to the exercise of state administration.
NT PO - non-investment transfers to contributory and similar organisations are mainly activity grants to established contributory organisations, but also grants to universities and public research institutions
Social benefits - in particular, expenditure on old-age, invalidity, widow's, widower's and orphan's pensions, but also benefits paid out in respect of sickness insurance, state social assistance, foster care, material hardship assistance, end-of-service benefits for members of the armed forces or persons with disabilities
Other NV - other non-investment expenditure (added to the total), which includes mainly current operating expenditure, expenditure on servicing the national debt, contributions to the EU budget, compensation to carriers for discounts imposed by the state, etc.
Investments - capital expenditure implemented by organisational units of the state in the form of direct investments or transfers, in particular to state funds, municipalities, business entities, contributory and non-profit organisations, universities or public research institutions.
MINISTRY OF FINANCE OF THE CZECH REPUBLIC/ gnews - RoZ
ILLUSTRATIVE PHOTO - pixabay
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