Overall expenditure rose 26.7% due to higher social costs including pensions and subsidies to bring down energy prices - increasing the spending by 88.8 billion crowns combined.
The state also paid higher interest on inflation-related government bonds as consumer prices continued to surge, with inflation standing at 15% year-on-year in March.
Budget revenue increased by 11.4% and did not cover the higher spending as the government has collected less than expected from a windfall tax on energy firms and banks. Finance Minister Zbynek Stanjura remained optimistic regarding the 2023 budget performance. "I expect the state's performance to improve significantly from the middle of the year at the latest, thanks to additional income from dividends, European (Union) funds and windfall-profit revenue," he said in a comment on the budget figures. The government targets an end of year deficit of 295 billion crowns for 2023.
The five-party centre-right cabinet has been debating a list
of spending cuts and tax hikes to cut the budget deficit by 70
billion crowns next year - which means finding well over 100
billion, because the government has also committed to raise
defence spending and teachers' salaries next year.
Stanjura said part of the fiscal consolidation measures, due
to be presented this month, could already be applied this year.
However, the results so far - especially the lower-than-expected
windfall tax income and a levy on electricity sales prices -
mean analysts are sceptical that the deficit target will be met.
"We expect a deficit of 315 billion crowns in our baseline
scenario," Komercni Banka economist Jaromir Gec said in a
report. "However we see a risk tilted toward an even deeper
deficit in relation to a significant downward revision of
expected windfall tax revenue."
The ministry has cut the expected revenue from the windfall
tax and electricity cap by 60% to 40 billion crowns.
It forecasts the public sector deficit - including the state
budget, regional and municipal budgets and the public health
system - will reach 4.2% of gross domestic product in 2023,
versus 3.6% in 2022.
(Reporting by Robert Muller and Jan Loaptka; Editing by Susan
Fenton)
