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Think-Tank IDEA: Where the First Draft Expenditure in the State Budget for 2022 Was Headed

14 January, 2022

The draft state budget (SB) for 2022 submitted at the end of summer 2021 by the outgoing government of Andrej Babiš planned for expenditures of 1,928 billion CZK. That would be 394.5 billion CZK; 25.7% more than the actual expenditure of the SB in 2019.

Such a significant increase in expenditure, unaccompanied by an adequate increase in revenues, would significantly increase the structural deficit of the SB. The new government of Petr Fiala has therefore decided to revise the original draft budget in a new provisional budget. 

In Think-Tank IDEA's most recent study, Petr Janský and Daniel Kolář identify the expenditure items in the original draft of the SB that have changed most significantly from the situation in 2019. 

  1. Pensions (including disability or widow's pensions) show an increase of 18% (+84 billion CZK) to a total of 556 billion CZK.
  2. Social expenditure, including parental allowance or child benefits, increase by 28% (+36 billion CZK), largely compensating for their long-term nominal stagnation. 
  3. Contributions to health insurance companies for state-insured persons show an increase of 93% (+67 billion CZK).
  4. Expenditure on regional education, especially on teachers' salaries, grew by 35% (+50 billion CZK).
  5. Investments from national sources in the SB show growth of 23% (+17 billion CZK)
  6. The Czech Republic's membership in the European Union is associated with an increase in expenditure of 76 billion CZK. Of these, investments covered by revenues from EU budgets show an increase of 97% (+62 billion CZK), while the Czech Republic's contributions to the EU increased by 32% (+14 billion CZK).
  7.  An additional 8 billion CZK represents purchases of additional vaccines against covid-19 in 2022.

The study also shows to what extent the nominal growth in SB items take inflation into account, expected to be 10.2% in this period. Comparison with the actual expenditure of 2019 allowed us to shield the direct expenditure consequences of the pandemic. 

The Czech Academy of Sciences supported Think-Tank IDEA's production of "Increase of 395 billion CZK compared to 2019: Where the first draft expenditure in the state budget for 2022 was headed" as part of its AV21 Strategy program "Society in Motion and Public Policies." The full study (in Czech) is available on Think-Tank IDEA's website.