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Optimism over 2000 deficit questioned

The Finance Ministry remained optimistic for the 2001 budget after its 2000 operating state budget deficit came in almost three billion crowns under its planned 18 billion crown mark.
Announcing a full state budget deficit of 27 billion crowns January 2 Finance Minister Brigita Schmögnerová explained that deducting exceptional extra-budgetary expenditures, including 8.5 billion crowns for bank restructuring, the state deficit was actually 15.1 billion crowns.

The Finance Ministry remained optimistic for the 2001 budget after its 2000 operating state budget deficit came in almost three billion crowns under its planned 18 billion crown mark.

Announcing a full state budget deficit of 27 billion crowns January 2 Finance Minister Brigita Schmögnerová explained that deducting exceptional extra-budgetary expenditures, including 8.5 billion crowns for bank restructuring, the state deficit was actually 15.1 billion crowns.

"This is a very good result for us. It would be wrong to say that the budget is 9 billion crowns over plans," said Peter Švec, Finance Ministry spokesman.

He added: "The planned deficit was 18 billion crowns plus expenditures under paragraph 12 [legislation on state finances stipulating extra-budgetary expenditures - ed. note]. If you add on the money for bank restructuring and [a guarantee for a loan to state-owned construction company] Vodohospodárska výstavba to the deficit that's the 27 billion figure."

Total state budget revenues stood at 213.44 billion crowns in 2000 and expenditures at 241.10 billion crowns. The cost of restructuring state banks was 8.48 billion crowns and the guarantee for Vodohospodárska výstavba was 4.03 billion crowns. Expenditures and revenues both exceeded the government's original estimates, with VAT tax revenues coming in 12% above target.

The final budget figures, including full state finances, will not be known for at least another six weeks. But analysts pointed to additional expenditures yet to be added on which will bring the full deficit up.

"What we have to remember is that these figures show only the state budget, and that is just a part of the wider general budget which includes all state finances. This wider budget will be much higher" said Vladimír Vaňo, analyst at ING Barings.

According to preliminary figures, state funds ended 2000 with a cumulative deficit of 4.993 billion crowns. With deficits in other state bodies and 7 billion crowns allocated for development projects figured in the total rises to 32.8 billion crowns - nearly 3.7% of GDP - considerably higher than the 3% of GDP (28 billion crowns) planned.

The International Monetary Fund (IMF) has criticised the 2001 budget deficit of 3.8% of GDP, saying that the figure should be 3.5% and that the budget carries too many expenditure risks.

"The IMF will not be happy if the deficit goes above 4%, but as we saw in 2000, revenues for 2001 have been underestimated. This is one thing the governemnt may have going for it," said Vaňo.

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