1 April 2021

Influence of extraordinary measures on the revenue, expenditure, and debt of the general government sector and capture thereof in the methodology

Due to extraordinary measures taken by the Government of the Czech Republic caused by the COVID-19 disease epidemic, economic activities in the CR were suppressed for a longer part of the 2020, which had a considerable impact on the revenue and expenditure of the general government. The reduction in economic activity alone and reliefs for the business enterprise sector entailed a decrease in tax and non-tax revenue. Following compensations for enterprises and supporting programmes to maintain the employment were at the same time largely reflected in an increase on the expenditure side.

While the measures were not reflected much in the data for the Q1 and Q3, however, in the data for the Q2 and Q4 the impacts of the governmental measures related to the COVID-19 epidemic were already significantly reflected. Mentioned measures had the greatest effect on the growth of general government expenditure and some, on the contrary, on the decline in their revenue.

Key measures having an influence on an increase of the general government sector expenditure and capture thereof:

• Expenditure capital transfers – mainly a compensatory bonus for the self-employed (compensatory bonus), a compensatory bonus for partners in limited liability companies;
• Subsidies on production - primarily the Antivirus programme to support the employment, then the COVID-Rent programme for entrepreneurs, COVID Accommodation programme and other similar support programs aimed at encourage in the areas of culture, bus transport, tourism, sports, etc.;
• Intermediate consumption – especially purchases of personal protective equipment and medical consumables;
• Social benefits - a higher attendance (carer´s) allowance for employees and the self-employed;
• Social transfers in kind - the COVID-Spa programme.

Key measures having an influence on a decrease of the general government sector revenue:

• Forgiving of minimum advance payments for the self-employed for social and health insurance;
• Forgiving of social security premiums and state employment policy paid by the employer (Antivirus C program).

The governmental measures in the form of guarantees for provided credits and “COVID I, II, III, COVID Plus, and COVID Prague programme” and other guarantee programmes have not affected the revenue and expenditure of the general government yet. They also do not have a direct influence on the level of indebtedness of the general government sector. A prospective influence on the deficit and debt of the general government sector will occur at that moment when the credits provided fail or when the guarantees provided are called in.