According to the quarterly state debt management report published by the Ministry of Finance, Czech state debt increased by CZK 96.2 billion to CZK 3.207 trillion in the first half of this year. However, national debt decreased by CZK 13.8 billion in the second quarter. The debt to gross domestic product (GDP) ratio stood at 41.3%, up half a percentage point from the beginning of the year.
Czech debt increase
According to the ministry, the increase in debt was mainly due to the sale of government bonds and treasury bills in the first half of the year to cover the state budget deficit on an ongoing basis. At the end of June, the budget deficit was CZK 178.6 billion and the state forecasts a deficit of CZK 252 billion for the whole year. On average, each Czech citizen carries a theoretical debt of CZK 295,326.
Petr Dufek, chief economist at Creditas Bank, pointed out that the Czech Republic’s national debt has increased by CZK 163 billion in the past year and by half a trillion CZK in the past two years. Although the pace of borrowing is slowing down, the state still has to borrow hundreds of billions to run its operations. Dufek emphasises that the main problem is not so much the amount of debt, but the continuous increase caused by permanent deficits in the state budget. The government’s medium-term outlook forecasts a deficit of more than CZK 200 billion for the next few years, which implies that the Czech Republic’s debt and associated debt servicing will continue to grow at a fast pace until the state economy shows significant improvement.
The debt ratio of the Czech Republic slightly exceeded the 2022 level of 41.1% of GDP. However, this increase must be interpreted in the light of recent GDP revisions by the Czech Statistical Office (ČSÚ). In June, the ČSÚ updated the data for the last 30 years to match the new EU methodologies, increasing nominal GDP for most years. This increase in GDP reduced the debt ratio, despite a possible increase in public debt, thus improving the perception of the Czech Republic’s debt sustainability.
In the first half of the year, the Ministry of Finance sold CZK 161.4 billion in nominal value of koruna bonds with a maturity of more than one year. At the same time, the state duly redeemed CZK 69.8 billion of previously issued bonds at the end of May.
Crown treasury bills, i.e. bonds with a maturity of less than one year, were also used to finance the state. Their net issuance, that is sales net of the volume of redeemed bonds, reached CZK 25 billion in the first half of the year. Net issuance of euro Treasury bonds amounted to half a billion euro (CZK 12.6 billion) in the first half of the year.
| Year | State debt (in CZK billion) |
| 1993 | 158,8 |
| 1994 | 157,3 |
| 1995 | 154,4 |
| 1996 | 155,2 |
| 1997 | 173,1 |
| 1998 | 194,7 |
| 1999 | 228,4 |
| 2000 | 289,3 |
| 2001 | 345,0 |
| 2002 | 395,9 |
| 2003 | 493,2 |
| 2004 | 592,9 |
| 2005 | 691,2 |
| 2006 | 802,5 |
| 2007 | 892,3 |
| 2008 | 999,5 |
| 2009 | 1178,2 |
| 2010 | 1344,1 |
| 2011 | 1499,4 |
| 2012 | 1667,6 |
| 2013 | 1683,3 |
| 2014 | 1663,7 |
| 2015 | 1673,0 |
| 2016 | 1613,4 |
| 2017 | 1624,7 |
| 2018 | 1622,0 |
| 2019 | 1640,2 |
| 2020 | 2049,7 |
| 2021 | 2465,7 |
| 2022 | 2894,8 |
| 2023 | 3110,9 |
| First half of 2024 | 3207,1 |
Public debt: trends and comparisons in the EU
In the first quarter of this year, Czech public debt was 43.4% of gross domestic product (GDP), keeping the Czech Republic among the ten European Union (EU) countries with the lowest public debt, well below the EU average. According to Eurostat, EU debt stopped decreasing in the first quarter, rising to 82% of GDP. The situation also worsened in the eurozone countries, where the debt of the 20 countries using the euro reached 88.7% of GDP, up from 88.2% of GDP at the end of the fourth quarter of last year.
In absolute terms, sovereign debt in the EU rose to over EUR 14.10 trillion (more than CZK 355 trillion) at the end of the first quarter, up from EUR 13.53 trillion a year ago. Greece continues to have the highest debt in the EU, but with a gradual improvement: at the end of the first quarter, Greek debt was 159.8% of GDP, down from 161.9% of GDP at the end of the fourth quarter last year and 169.4% a year ago. Italy, France, Spain, Belgium and Portugal also maintained debt levels above 100% of GDP. On the other hand, Bulgaria recorded the lowest debt at 22.6% of GDP.
The fastest increase in debt compared to the previous quarter was recorded in Slovakia, where it rose by 4.6 percentage points to 60.7% of GDP. In contrast, the largest decreases in debt were observed in Greece, followed by Cyprus, the Netherlands and Sweden. Germany also managed to reduce its debt slightly.
This overall picture highlights the different dynamics of public debt within the European Union, with some countries improving their financial situation and others facing significant increases in their public debt.
Source: https://www.irozhlas.cz/ekonomika/statni-dluh-za-pololeti-vzrostl-o-962-miliardy-korun-vysplhal-se-tak-na-vice-nez_2407191752_adn https://www.novinky.cz/clanek/ekonomika-zadluzeni-eu-se-zvedlo-na-82-procent-hdp-roste-i-v-cesku-40481166 https://www.camic.cz/it/news/lindebitamento-della-repubblica-ceca-resta-tra-i-piu-bassi-dellue/
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