INDEBTEDNESS OF EU COUNTRIES WAS DOWN LAST YEAR. CZECH DEBT IS THE FOURTH LOWEST IN THE EU28

INDEBTEDNESS OF EU COUNTRIES WAS DOWN LAST YEAR.  CZECH DEBT IS THE FOURTH LOWEST IN THE EU28

Public sector debt in the Czech Republic amounted to 32.7 percent of GDP last year, which made it the fourth lowest of all European Union countries. Based on the most recent Eurostat data, only Estonia (8.4%), Luxemburg (21.4%), and Bulgaria (22.6%) are doing better, leaving Greece with a debt of 181.1% of GDP at the other end of the scale, followed y Italy (132.2%), and Portugal (121.5%).

Source: Eurostat

Overall indebtedness of European Union countries last year dropped by 1.7 percentage points year on year, to a flat 80%. One-half of the 28 EU member states have a debt in excess of the 60% of GDP threshold set by Maastricht convergence criteria.

In terms of public sector surpluses (difference between overall income and expenditures), Luxemburg had the greatest last year (+2.4% of GDP), followed by Bulgaria and Malta (2% each). The Czech Republic also posted a surplus (0.9%).   At the other end of the scale, the most profound public sector deficit was noted in Cyprus in 2018 (-4.8% of GDP) and Romania (-3% of GDP).

Even though the Czech Republic is currently one of the relatively least indebted countries, its public finance is not sustainable in the long-term, as shown by the  Report on the Long-term Sustainability of Public Finance, published last October by the Czech Fiscal Council.  The main reason is the ageing of the population, which, unless a fundamental change is made, will gradually result in deepening pension system deficits and increased indebtedness.