According to recent calculations by the National Budget Council, the Czech Republic will face the so-called debt brake as early as 2024 due to the development of public debt, CZK 500 billion. Last November, the council assumed that public finances would not hit the debt brake until a year later.
The debt brake sets a threshold above which the government must submit a proposal for a balanced or surplus state budget and funds. It is set at 55 percent of gross domestic product.
Finance Minister Alena Schiller (YES) told the deputies today that public debt should rise to 45 percent of GDP by the end of the year. “We are among the countries with the lowest debt and the best ratings. It is our duty to take advantage of this great position and continue to provide massive support to the economy,” the minister argued on Monday after the government meeting.
However, Zamrazilová pointed out that from the end of 2018 it was an increase in debt, which the Czech economy experienced during the financial crisis from 2008 and 2009 to 2014. “What we then burdened public finances for five or six years, we can now manage for two years, “she said. “And if the deficit for 2022 were added to that, we would be at least 50 percent and we would already be very attacked by the debt brake. According to our calculations from yesterday, we will reach it in 2024,” she said.
“You are really voting on a breakthrough change in public finances, which, if implemented, will mean the need to substantially increase taxes,” Zamrazilová warned. According to her, taxes will have to be increased in two years at the latest, as the economy approaches the debt brake.
Source: CTK
