Last year, the Czech national debt increased to a record 2.895 trillion crowns

Czech banknotes, crowns, bank safe – illustration photo.

Prague – Czech national debt increased to a record 2.895 trillion crowns last year. The amount of the debt was confirmed by the Ministry of Finance, which was tentatively published at the same level already at the beginning of January. Theoretically, each Czech owes 275,033 crowns. State debt increased by 429 billion crowns year-on-year. The debt ratio reached 42.9 percent of gross domestic product (GDP), an increase of 2.5 percentage points from the end of 2021.

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The increase in state debt is mainly due to the issuance of new state bonds, which the Ministry of Finance used to finance last year's budget deficit of 360.4 billion crowns. The state also borrowed money to provide a loan to the semi-state energy company ČEZ, which was struggling with an unexpected increase in advances on the energy exchanges.

Expenditures for servicing the state debt increased by 7.5 billion crowns to 49.7 billion. Higher expenses were reflected in the growing volume of state debt and, at the same time, the increase in the basic interest rate of the Czech National Bank in the first half of last year.

The gross issue of medium-term and long-term government bonds in the primary and secondary market last year reached 431.3 billion crowns with an average yield of 4.83 percent. On the primary market, the state sells newly issued bonds, on the secondary market it is traded with already issued bonds. The yield on government bonds rose from 1.61 percent the year before, mainly due to higher interest rates from the central bank.

The average maturity of bonds issued last year was 7.7 years. Given that the newly sold bonds have an average shorter maturity than previously issued ones, the average maturity of the national debt decreased to 6.2 years from 6.4 years the year before. The debt maturity period was thus below the Ministry of Finance's target of 6.5 years.

The state's net income from money market operations reached 22.1 billion crowns, an increase of 19.7 billion crowns year-on-year. Higher interest rates contributed to the result.

The national debt is made up of the government's debts and arises primarily from the accumulation of state budget deficits. It is financed by treasury bills, government bonds, direct loans or loans from the European Investment Bank.

State debt development (in billions of crowns):

Source: Ministry of Finance