Czech government to ask European Commission for CZK 137 billion loan

Part of the country's National Recovery Plan, the loan and other EU grants aim to bolster Czechia's economy. Staff ČTK

Written by StaffČTK Published on 15.06.2023 10:34:00 (updated on 15.06.2023) Reading time: 2 minutes

The Czech government has given its much-anticipated approval to the country’s updated National Recovery Plan, which includes the request for a CZK 137 billion loan from the European Commission and CZK 33.4 billion in grants. Czechia originally planned to receive CZK 179 billion from the plan in the form of subsidies only.

A plan to boost Czechia's industries

The loans and grants are poised to inject much-needed impetus into the nation's key sectors through ambitious initiatives designed to tackle several pressing challenges. Foremost among these is the commitment to wean Czechia off fossil fuels, thus paving the way for a greener, more sustainable future.

A strong emphasis has also been placed on embracing digitalization, enabling the country to harness the transformative power of technology and fortify its competitive edge. The plan also prioritizes comprehensive reforms in the field of education, aiming to create a robust and inclusive learning environment for all citizens.

The National Recovery Plan also allocates substantial resources toward the critical areas of accessible housing and geriatric care. By addressing the pressing need for affordable housing, the government seeks to improve living conditions and promote social welfare. Substantial investments in care for the elderly will ensure that the country's aging population receives the support and services it requires.

While the plan embodies an ambitious vision, some adjustments had to be made to align it with the available funding. Minister of European Affairs Martin Dvořák acknowledged that certain ministries – notably the Ministry of Labour and Social Affairs and the Ministry of Education – had to revise their financial requests to accommodate the revised plan. 

Poor public finances need fixing

Looking ahead, Dvořák shared the government's fiscal aspirations, highlighting the objective to achieve a deficit of CZK 270 billion for the upcoming year. 

Budgetary revenues for the first four months of the year reached CZK 533.9 billion, while expenditures reached CZK 733.9 billion, making it difficult for the government to maintain its approved full-year deficit goal. Czechia's total government debt surpassed CZK 1.3 trillion at the end of last year and the 2022 budget balance posted a CZK 360.4 billion deficit – the third-worst result in the country’s history.

Czechia's state budget ended in a deficit of CZK 200 billion in April, the deepest April deficit since the country's founding. The Czech pension insurance system also ended the first quarter of 2023 with a CZK 25.7 billion deficit, the worst first-quarter result in the country's history so far, according to Finance Ministry data.

With its National Recovery Plan, bolstered by substantial loans and grants, Czechia aims to embark on a transformative journey to rebuild and revitalize its currently ailing economy.

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