COMMITTEE ON BUDGETARY FORECASTS CONSIDERS FORECAST MADE BY MINISTRY REALISTIC

COMMITTEE ON BUDGETARY FORECASTS CONSIDERS FORECAST MADE BY MINISTRY REALISTIC

On Wednesday 13 November, a meeting of the Committee on Budgetary Forecasts met at the Ministry of Finance of the Czech Republic.  At this meeting, committee members, who are leading Czech economists, discussed the November fiscal forecast issued by the Ministry of Finance of the Czech Republic and rated it as realistic, in terms of the likelihood of its fulfilment in 2019 and 2020.  A total of six of the eight committee members voted in favour of this rating.  One committee member voted against, while another abstained from the vote.  The remaining two committee members excused themselves from the committee meeting.  “The vast majority of the Committee’s members concurred with the overall impression given by the MF forecasts and, at most, saw the development of certain sub-indicators differently,” stated the Committee, in the rationale for its opinion.

Furthermore, the document states that, at their meeting, committee members discussed the rate of growth in foreign demand, components of domestic GDP growth, and their impact on the external balance of the Czech economy.  Several discussants expressed the opinion that some indicators may develop somewhat better in 2020 than expected by the forecast.  This pertains primarily to development abroad and growth in private investments in the Czech Republic.  The committee member who promoted a cautious evaluation of the forecast emphasised the possibility of a positive deviation in both the parameters mentioned.  “It seems that the worsening of the macroeconomic outlooks of the Czech economy, observed over the course of a number of preceding months, has halted for now,” said the Committee’s chairman, Pavel Sobíšek, after the meeting.

Unlike last November, the Committee on Budgetary Forecasts did not evaluate the fiscal forecast of the Ministry of Finance of the Czech Republic.  This was because the Ministry did not present its November prediction of public budget income to the Committee on Budgetary Forecasts for evaluation, stating that the prediction of next year’s state budget income, which was assessed by the Committee on Budgetary Forecasts at its last meeting, on 29 August 2019, has already been integrated in the draft State Budget Act for 2020.  Given that the draft State Budget Act for next year has already been approved by the Chamber of Deputies on first reading, total income of the state budget is fixed and will not be changed during further deliberations in the Chamber of Deputies.

Nevertheless, at their Wednesday meeting, members of the Committee on Budgetary Forecasts were informed about the updated prediction of state budget income, by representatives of the Ministry of Finance of the Czech Republic.  The Committee on Budgetary Forecasts then discussed the income prediction in light of updated macroeconomic outlooks, legislative developments, and certain technical aspects.

The Committee then welcomed a guest to its meeting, the chair of the Fair Pensions Committee, Rector of Mendel University in Brno, and tax expert, prof. Ing. Danuše Nerudová, Ph.D.  She presented a lecture to committee members entitled “Estimate of Tax Revenues and Reform of the Tax System in the Czech Republic” and took part in the subsequent discussion on the topic.