Finance Ministry proposes 2000 budget gap of 2% of GDP

The Finance Ministry said on June 14 it would propose a budget for 2000 with a deficit of 18 billion crowns, or about 2.0% of gross domestic product. "The Finance Ministry will promote a scenario corresponding to a state budget deficit at most two percent of GDP. Given our GDP estimates, this would be about 18 billion crowns," Finance Minister Brigita Schmögnerová told a news conference.

"We have two scenarios for 2000. At this time, the worst case scenario expects (real) GDP growth of only one percent, the better scenario at two percent."

The 1999 budget expects a state budget deficit of 15 billion crowns or about two percent of GDP, based on GDP growth of 3.0%, 15% unemployment and 10% inflation. Analysts and the government itself have warned that growth may fall well short of three percent. Schmögnerová said recently she expected 1999 inflation at about 11.4%.

The two percent growth scenario for 2000 is based on expectations of 16% unemployment and 10% inflation, said Schmögnerová. "These preliminary proposals will first be discussed at an unofficial government session probably on June 17," Schmögnerová added.

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