Government Proposes Extending Financial Assistance to Self-Employed through May, Plans to Increase Contributions on Behalf of State-Insured Persons

Andrej Babiš’s administration met on Monday, 20 April to discuss other ways to assist entrepreneurs suffering the consequences of the coronavirus pandemic. Hard-hit self-employed persons are to receive financial assistance from the government even after 30 April right through until the emergency measures are lifted. The government will also propose to the Chamber of Deputies a further increase to the budget deficit, thus bringing it up to CZK 300 billion. One of the reasons for this increase is the planned outlay of almost CZK 21 billion this year in the form of additional contributions paid into the health insurance system on behalf of state-insured persons.

Self-employed persons whose businesses have suffered losses as a result of the imposed measures or impact of the coronavirus crisis will be able to request financial assistance from the government even after 30 April. The government had earlier offered self-employed persons CZK 500 per day for the period from 12 March to 30 April  as compensation for hardships caused by the crisis, which translates to a total of CZK 25 000 per person. Today, the government, at the proposal of the Minister of Finance, approved an amendment to the Compensation Bonus Act in connection with the SARS-CoV-2 coronavirus emergency measures that should allow a bonus of CZK 500 per day to be paid out for the whole of May until 8 June, which is when the last restrictions are set to be lifted.

Therefore, if this amendment is approved by Parliament in the state of legislative emergency as the government proposes, self-employed persons will be able to request an additional CZK 19 500. More details can be found in in the Ministry of Finance press release (in Czech language).

Ministers also discussed the Minister of Finance’s amendment to the Act on the  State Budget of the Czech Republic for 2020, under which the state budget deficit for this year will increase from CZK 200 billion to CZK 300 billion. This increase has been prompted by the newest macroeconomic forecasts, which anticipate further economic deterioration and the related drop in tax revenues and revenues from social insurance contributions. State budget revenues are expected to fall by CZK 60.1 billion. At the same time, however, the government also plans, for example, to increase assistance to entrepreneurs and individuals or provide additional funding to the health care system, which has been hit hard by the coronavirus. More information can be found in the Ministry of Finance press release (in Czech language).

The government has boosted assistance to small and medium-sized enterprises as well. It approved a state guarantee of CZK 150  billion on loans. The guarantee on business loans from commercial banks will be provided by the Czech-Moravian Guarantee and Development Bank. The government guarantee should help companies gain easier access to the funds they are lacking due to lost revenue resulting from the coronavirus crisis. The government expects such loans to total CZK 600 billion. The draft law on the provision of a state guarantee of the Czech Republic for the debts of the Czech-Moravian Guarantee and Development Bank stemming from loans provided to mitigate the negative impacts of the SARS-CoV-2 coronavirus still has to be approved by Parliament in the legislative emergency state.

Andrej Babiš’s administration has decided to provide financial assistance to healthcare as well, as this sector is incurring substantial costs in connection with COVID-19. Moreover, a decline is expected in the amount of health insurance collected due to the expected economic downturn and the resulting drop in employee income. The government has decided to compensate these fluctuations by gradually increasing contributions paid on behalf of state-insured individuals, i.e., children, seniors, the unemployed, etc. In the draft law on health insurance contributions, which the administration will be submitting to Parliament in the legislative emergency state, contributions are to be increased by CZK 500 per state-insured person per day as of 1 June 2020 and by an additional CZK 200 as of 1 January 2021. This increase – which will help finance healthcare – will cost the state budget CZK 21 billion this year and about CZK 50 billion next year. More details can be found in the Ministry of Health press release (in Czech language).

The government also took note of several new Ministry of Health emergency measures. One such measure aims to consolidate the cooperation mechanism between all regions, regional public health authorities, emergency services, testing sites and laboratories with the COVID-19 Central Steering Team under the Smart Quarantine system in the Czech Republic. This will ensure proper coordination of information flows across all stakeholders. More details can be found in Ministry of Health press release (in zech language).

Other measures cancel the Ministry of Health’s ban on exporting personal hygiene products intended for hand disinfection, ban on flights from China and ban on accepting visas in Tehran, China and Hong Kong. An overview of the Ministry of Health’s emergency measures can be found here: https://koronavirus.mzcr.cz/category/mimoradna-opatreni/ (in Czech language).

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