Czech Government Meeting

Item No. 3: Report on the Implementation of the State Budget of the Czech Republic for the First Half of 2007 has been approved by the cabinet. Pursuant to the provisions of § 20 of Act No. 218/2000 Coll., on budgetary rules, the Government submits to the House of Deputies, after the end of the first half of the year, a report reviewing economic developments and implementation of the government budget. The report also contains an evaluation of the implementation of the budgets of the country’s territorial self-governing units, of the development of the government’s financial assets and liabilities, status of its guarantees, and the development of the state debt. The report comes complete with information on the results of the state budget management for the period January to August 2007, and an outlook for the overall implementation of the state budget until the end of this year. In the first six months of this year, the public revenues amounted to 483.3 billion CZK, while expenses reached 482.0 billion CZK. As a result, the state budget had a surplus amounting to 1.3 billion CZK.

Finance Minister Miroslav Kalousek commented as follows: “The Czech Republic’s gross domestic product increased by 6.2 percent during the first half of this year, still leaving this country among one of the fastest growing economies in the EU. The EU´s overall average growth rate is 2.9 percent. Total rate of employment in the country rose by 1.8 percent, the number of employees went up by 1.6 percent, and the number of entrepreneurs by 2.7 percent... However, new job opportunities are not often taken up by domestic workers but are filled instead by foreign nationals, whose number has been markedly rising, as of June 30, 2007 there were 275,000 foreign nationals working legally in the Czech Republic. During the first six months of 2007, the unemployment rate dropped year-on-year by 1.4 percentage point to 5.7 percent. Labour productivity, measured as a value in constant prices per one employed person, rose by 4.4 percent. An average gross nominal wage for the first half of this year went up by 7.6 percent, with consumer prices growing year-on-year by 2.5 percent... The country’s trade balance in the first six months of 2007 reached a surplus of 71.8 billion CZK, which is a significantly positive result, the Czech crown has strengthened as compared with both world currencies, by 1.2 percent towards the Euro, and by 9.5 percent towards the US dollar. During the first half of this year the ongoing economic management figures ended in a surplus of 1.3 billion CZK. Total public revenues for the first six months reached 483 billion CZK in real terms, which accounts for 51 percent of the budgetary income, and overall expenses totalled 482 billion CZK, i.e. 46 percent of budgetary expenditures. Proceeding from the data available so far, we expect the final deficit to be more positive than predicted; let’s recall that a 91.3 billion CZK deficit was budgeted, to which those 31 billion CZK from the extraordinary revenues gained from the sale of state property have to be added…. The now available indicators suggest that the deficit may amount roughly to 81 billion CZK…. There are signs that thanks to a more favourable economic situation the overall deficit of public budgets, predicted early this year at 3.9 percent, may end up approximately at the level of 3.6 percent...“.

Item No. 4: Draft Amendment of Act No. 250/2000 Coll., on budgetary rules for local budgets has been approved by the cabinet. A requirement has been voiced, connected with the process of drawing of EU funds, to facilitate the transfer of unused funds, allocated within a calendar year to contributory organizations established by the state or territorial self-governing units, to their own reserve funds and to allow their further use in the following year for the same purpose. This particular change is contained in the planned draft amendment. This legislative change is made in connection with the amended Act No. 218/2000 Coll. (budgetary rules). The proposed change is analogous to the proposed amendment of the legislation governing the management of the state contributory organizations.
Finance Minister Miroslav Kalousek had this to say on this issue: “The Government has just approved a simple technical Amendment of the law on the budgetary rules for local budgets, i.e. for regional self-governing authorities. Our key goal is to allow the contributory organizations set up by the regions to have the same regime in drawing EU finances from the Norwegian Funds, eventually from Swiss-Czech cooperation, as the contributory organizations established by central authorities. The underlying purpose of this amendment is to make it possible for such contributory organizations to transfer their finances, unused in one budgetary year, into their reserve funds and to use them for the same purpose in the following accounting period“.

Item No. 5: National Strategy for Financial Training

Item has been withdrawn.
Finance Minister Miroslav Kalousek commented as follows: “Following an extensive debate at the Government session I have withdrawn the document entitled “National Strategy for Financial Training“ without a substitute material since the debate made it absolutely clear that a concentrated strategy was not needed. Nevertheless, the rules according to which fundamentals of the knowledge of financial matters, financial literacy if you want, should be taught at schools may eventually be incorporated into individual departmental policies, e.g. in the concept of long-term education. Seen in this light, I am withdrawing this document without seeking its further discussion“.

Press Department of the Office of the Government of the Czech Republic