NORDSCI Conference proceedings 2019, Book 2

Finance

REVENUE AND EXPENDITURE ANALYSIS FROM THE POINT OF VIEW OF THE STATE BUDGET BALANCE

Assist. Prof. Eleonóra Matoušková, PhD.

ABSTRACT

The aim of this article is to compare the revenue and expenditure of the state budget in two EU countries - in the Slovak Republic (SR) and Czech Republic (CR). Due to the fact that the SR and CR are paying other currency, we have compared only the ratio indicators of both countries. For the reference period, we have identified the period from 2014 to 2018. In this period the economies of both countries have completely overcome the effects of global financial and economic crisis and achieved relatively high economic growth. It was a period very favourable to the governments already not to implement state budget deficits but on the contrary to achieve a balanced state budget.
The average rate of economic growth in the reporting period amounted to 3.6% in the Slovak Republic and to 3.2% in the Czech Republic. The unemployment rate in the SR decreased from 12.3% in 2014 to 5.0% in 2018 and in the CR from 6.1% to 2.1% in the same period. The share of public debt to GDP fell from 53.5% in 2014 to 48.7% in 2018 in the SR. The same indicator fell much more sharply in the CR, from 42.2 % in 2014 to 30.5% in 2018. Fiscal position of the SR and CR was thus during the reporting period favourable.
Total revenue of the state budget in the CR in reporting period slightly grew (with the exception of their minimal decline in 2016). The Czech Republic nearly has reached balanced budget in the year 2017. Significant growth of state budget revenue took place in the year 2018, which greatly contributed to the surplus of the state budget in 2018. The surplus was not only a result of economic boom, but primarily a result of structural improvement in public finances. Favourable economic situation allows to create reserves on cyclical fluctuations in the future, what the Czech government actually is carrying out through the creation of surpluses and decline in debt ratio.
The state budget revenue in the Slovak Republic has been relatively stable during the reporting period, they moved at an interval of 14.1 - 4.4 milliard EUR. In the year 2018 has reached a historical maximum of 15.4 milliard EUR. The Slovak government has introduced a number of measures at that time, which have asked for an increase in expenditure from the state budget. They are not measures that would have brought positive structural changes and which would have, in the medium or long term a positive effect on the revenue part of the state budget or budget of municipalities. These are a few packages of social measures. Although in terms of solidarity is the goal of these measures correct, most of them have been introduced across the board, that is, they were addressed to the individuals or families whose economic situation does not require it.
The Czech Republic made use well a very favourable economic situation in the last five years, to achieve a balanced (or surplus) state budget. The Slovak Republic also gradually reduces the state budget deficit, however, it persists still. Therefore, it can be stated that the fiscal policy of the Czech Republic was more responsible than the fiscal policy of the Slovak Republic.

KEYWORDS

state budget, revenue, expenditure, public debt

REFERENCE

NORDSCI Conference Proceedings 2019, Book 2, Conference Proceedings, ISSN 2603-4107, ISBN 978-619-7495-06-5, REVENUE AND EXPENDITURE ANALYSIS FROM THE POINT OF VIEW OF THE STATE BUDGET BALANCE, 209-215 pp, DOI paper 10.32008/nordsci2019/b2/v2/27