2007: Fiscal Deficit To Deteriorate Further

February 2007 | Market Strategy

The Czech government announced on February 1 that the central state fiscal surplus increased by 46.8% y-o-y to CZK5.03bn in January 2007 (up from a 1.7% y-o-y decline in January 2006). Despite this positive start into the new year, we are unconvinced that the government will be capable of sorting its budget finances any time soon. In 2006, particularly disappointing was that the state central government deficit amounted to CZK97.6bn, which represented a 73.2% y-o-y increase from the previous year. Similarly, on a general government level, the deficit came in at CZK97.8bn in 2006, or 3.2% of GDP. This meant that, after a promising fiscal performance in 2005,

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