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The trend of gradual debt reduction also continued in the eurozone countries. Debt there fell to 89.9 percent in the third quarter from 90.3 percent in the previous quarter. In both the EU and the Eurozone as well as in the Czech Republic, debt is lower compared to the previous year.
At the end of the third quarter, public debt in the EU rose in absolute terms to over 13.78 trillion euros (more than 341 trillion CZK), while a year ago it exceeded 13.20 trillion euros. In the Czech Republic, national debt rose to a record high of more than 3.21 trillion crowns. A year earlier, at the end of the third quarter of 2022, it was over 2.98 trillion crowns.
In the third quarter of last year, the EU’s public finance deficit reached 2.8 percent of GDP, according to seasonally adjusted data, improving from a deficit of three percent in the previous quarter and from a deficit of 3.8 percent of GDP a year earlier, said Eurostat in a separate report.
Inflation in the Czech Republic is still the highest in the entire EU
In the Czech Republic, on the other hand, the deficit worsened from 2.9 percent at the end of the second quarter to 3.1 percent, but improved year-on-year – at the end of the third quarter of 2022 it was 4.3 percent of economic output.
Greece, which is a member of the Eurozone and got into such big problems after the financial crisis of 2008 and 2009 that it had to be rescued from bankruptcy by other Eurozone member countries and financial institutions, including the International Monetary Fund (IMF), continues to go the highest have debts. Greece’s debt was 165.5 percent of GDP in the third quarter of last year, compared to 167.1 percent in the previous quarter. Greece is continually reducing its debt from high levels.
Italy, France, Spain, Belgium and Portugal are also heavily indebted, with debts amounting to over 100 percent of GDP. The Czech Republic therefore continues to have significantly less debt than the EU average. At the end of the third quarter, Estonia was the only country in the EU with the lowest debt, with a value of less than 20 percent of economic output, along with Bulgaria, Luxembourg and Sweden, where debt does not exceed 30 percent of GDP.
The lowest debt under Klaus
In the modern history of the Czech Republic, i.e. since 1993, public debt was lowest between 1996 and 1998, when it was nine percent of GDP. Václav Klaus was prime minister at the time. From 1999 to 2013, debt rose continuously, from ten percent to 41 percent of GDP. The heads of government at that time were initially the Prime Ministers of the ČSSD Miloš Zeman, Vladimír Špidla, Stanislav Gross and Jiří Paroubek, later the Prime Ministers of the ODS Mirek Topolánek and Petr Nečas as well as the two non-party members Jan Fischer and Jiří Rusnok.
From then until the pandemic, debt fell to 29 percent of GDP in 2019. In these years, the finance ministers were Andrej Babiš and then Alena Schillerová, both from the ANO movement.
The European Union’s fiscal rules, known as the Stability and Growth Pact, require that public debt not exceed 60 percent of GDP and budget deficits not exceed three percent of GDP. However, Brussels suspended the pact’s validity in 2020 due to the economic impact of the Covid-19 pandemic. He subsequently extended his extraordinary release, largely due to the energy crisis caused in part by the war in Ukraine.
More than a tenth of Czechs are in risky debt
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