The Czech Fiscal Council is keeping a close eye on the constantly\nchanging situation caused by the COVID-19 pandemic and on the measures being\nadopted in relation to it, not only domestically, but also abroad. We then evaluate that information, in particular\nwith a view to the possible impact of those measures on the Czech economy and\npublic finance as a whole.<\/p>\n\n\n\n
At present, it is not possible to calculate the impact with sufficient\nprecision, but it is already evident that extraordinary fiscal measures will be\nrequired to overcome the extraordinary healthcare and economic situation. These will require a change of the 2020 state\nbudget act. The Council is of the\nopinion that the fiscal policy response must be rapid and sufficiently\nmassive. An advantage of the Czech\nRepublic in this regard is that, unlike many other EU countries, it is entering\nthe coming economic crisis with a relatively low level of public debt and hence\nhas relatively a great deal of room for fiscal stimulus. Also, the institutional set-up of fiscal\npolicy specified in Act No. 23\/2017 Coll., on budgetary responsibility rules,\nallows the limit values of public budget deficits to be exceeded in such\nspecific situations.<\/p>\n\n\n\n
In this context, the CFC welcomes that the government of the Czech Republic\nhas already announced the general framework of direct and indirect support to\nentrepreneurs, companies, and individuals. \nGiven that, even with the expected significant increase of public budget\ndeficit, the government will not have unlimited funds, all measures must be\ntargeted into areas where they will either prevent significant social problems\nrelated to, for example, bankruptcies of companies or sole proprietors or to\nlay-offs, or where they will bring a significant positive stimulus for the\ncountry\u2019s economy with a high multiplication effect. <\/p>\n\n\n\n
Good news for the Czech economy is the scope of the measures announced\nby Germany for its economy. The largest\ntrading partner of the Czech Republic is planning to provide support loans of\nup to EUR 550 bn through its state development bank. This step will, in turn, help many Czech\ncompanies for which Germany is a key export partner. The German government may provide support in\nthis extent to its economy without greater difficulties, among other things\nbecause, in recent years, it has been practicing a procyclical fiscal policy\nand created budget surplus.<\/p>\n\n\n\n
The Czech Fiscal Council will continue to assess the situation and the\nimpact of the measures taken in relation to the pandemic, on public finance and\non the economy as a whole, and will inform industry professionals as well as\nthe general public of its findings. \nNaturally, in doing so, it will take account the extraordinary nature of\nthe situation and of the exceptional nature of the expenses that must help\ncitizens of the Czech Republic cope, not only with serious medical risks but,\nlast but not least, with the adverse effects of the pandemic on their\nlives. If necessary, the Office of the Czech\nFiscal Council is also prepared to offer its expertise and analytical capacity\nfor searching for and evaluating other options for supporting the Czech economy\nand helping it overcome this difficult situation. <\/p>\n","protected":false},"excerpt":{"rendered":"
The Czech Fiscal Council is keeping a close eye on the constantly changing situation caused by the COVID-19 pandemic and on the measures being adopted in relation to it, not only domestically, but also abroad. We then evaluate that information, in particular with a view to the possible impact of those measures on the Czech…<\/p>\n","protected":false},"author":3,"featured_media":7094,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-7352","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"yoast_head":"\n