Notifications of the government deficit and debt

Notification of government deficit and debt

April 2008

The notification of government deficit and debt is compiled for the past four years as a rule and submitted by each member state of the EU twice a year, regularly at the close of March and September, including a projection for the current year. The calculation of the aggregates requested relies on the methodology of the European system of national accounts (ESA 95). Pursuant to the Maastricht criteria, the deficit and the cumulated debt should not exceed 3% of GDP and 60% of GDP respectively.



The government deficit/surplus and the government debt reflect the financial performance of all institutional units classified to the general government sector – they are governmental departments, territorial self-governing units, some semi-budgetary (subsidized) organizations, state and other extra-budgetary funds (e.g. Land Fund, Support and Guarantee Agricultural and Forestry Fund, or Vine-grower Fund), Railway Infrastructure Administration, transformation institutions (Czech Consolidation Agency etc.) which are finishing their activity, public universities, public research institutions (semi-budgetary organizations till 2006) and health insurance companies.

Government deficit/surplus – EDP B.9 - refers to net borrowing (-) or net lending (+) including interest on swap transactions. It shows the ability of the general government sector to finance other entities (+) or the need of the general government sector to be financed (-).

Government debt includes, by definition, liabilities of the general government sector resulting from currency emissions (not applicable to the CR), received deposits, issued securities other than shares (except for financial derivatives), and received loans.

Indicators given in the table were sent to Eurostat on 31 March 2008. In comparison to the autumn 2007 notification, data for 2005 and 2006 have been updated due to more detailed and additionally arrived information on transactions of institutions classified to general government sector (e.g. income tax) and due to new methods of recording government activities in their bookkeeping system (e.g. conversion of debt denominated in foreign currency to national currency). Based on Eurostat’s decision on methodological changes in the classification of general government revenues and expenditures, losses from sales of foreign claims are included into central government expenditures. The data for 2007 have been compiled from preliminary data reported by government institutions; extrapolation methods and expert guesses were used. The interannual decrease of the government deficit results especially from a considerable increase of surplus of local government units (by CZK 23.3 billion) and health insurance companies (by CZK 5.6 billion).

The projection of government deficit and debt for the year 2008 prepared by the Ministry of Finance was adjusted accordingly; it is published separately by MoF.

Prague, 31 March 2008