The Czech national debt has risen to 3.044 trillion crowns in the first half of the year, surpassing the threshold of three trillion crowns for the first time.
The Situation
The national debt of the Czech Republic reached 3.044 trillion crowns in the first six months of the year, exceeding the three trillion crowns mark for the first time. The debt has increased by 149.6 billion crowns since the beginning of the year. The debt-to-GDP ratio in the first half of the year was 42.8 percent of the gross domestic product, an increase of 0.1 percentage point compared to the end of the previous year. Hypothetically, every Czech citizen has a debt of 280,574 CZK.
Main Causes
The main reason for the increase in the national debt was the sale of government bonds and treasury bills to continuously cover the state budget deficit, as stated in the quarterly report on the management of the national debt by the ministry. The budget deficit in the first half of the year was 215.4 billion crowns. The Minister of Finance, Zbyněk Stanjura (ODS), emphasized that the trend of growing debt confirms the need to approve the recovery package. Without it, the debt growth cannot be halted, and the state returns to unsustainable management. He stated, “This year alone, we will pay 70 billion crowns for the service of the national debt, 90 billion crowns next year, and over 100 billion crowns in 2025.”
Debt Coverage Guarantees
The majority of the public debt is covered by medium and long-term government bonds issued on the domestic market. Their value in the first half of the year was 2.663 trillion crowns. Other significant sources of debt coverage are treasury bills with maturities of less than a year and received loans and credits. In the first half of the year, the state sold crown-denominated bonds with a nominal value of 287.4 billion crowns. The nominal value of crown-denominated treasury bills sold in the first half of the year was 74.3 billion crowns. Additionally, the state issued euro-denominated treasury bills with a total value of 1.5 billion euros (36.1 billion crowns) in the first half of the year. At the beginning of this year, the national debt amounted to 2.895 trillion crowns. In the June update of the national debt financing strategy, the Ministry of Finance predicts that the debt will increase to 3.191 trillion crowns during the year. The debt-to-GDP ratio at the end of the year is expected to be 42.7 percent of the GDP, the same as the end of 2022. Public debt is constituted by the government’s debts and mainly arises from the accumulation of state budget deficits. It is financed through treasury bills, government bonds, direct loans, or loans from the European Investment Bank. According to the approved state budget, the costs for servicing the state debt are expected to reach 69.2 billion crowns this year.
Sources: https://www.patria.cz/
Image source: https://pixabay.com/
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