September 18, 2018 / 9:00 AM / 3 months ago

Czech budget council says 2019 deficit target "not optimal"

PRAGUE, Sept 18 (Reuters) - Plans by the Czech government to run a central state budget deficit of 40 billion crowns ($1.84 billion) in 2019 are “not optimal”, the National Budget Council said on Tuesday.

The council, made up of economists who are confirmed by parliament, reiterated recommendations to use the Czech Republic’s strong economic growth - forecast above 3 percent next year - to create reserves for use in hard times. The council’s role is strictly advisory - it cannot block a budget.

The government of Prime Minister Andrej Babis is due to approve 2019 budget plans this month and submit a draft to lawmakers. Finance Minister Alena Schillerova said last month she would propose a central state budget with a deficit of 40 billion crowns.

A strong economy, the tightest labour market in the European Union and a steady flow of development subsidies have helped to make the Czech Republic one of the EU’s best budget performers.

It posted overall fiscal surpluses in the previous two years. The central budget - which makes up the bulk of the Czech Republic’s overall fiscal balance - ended 2017 in a 6 billion crown deficit, much lower than planned.

Critics, though, say the government is running deficits at a time of strong growth and strapping future budgets with generous spending commitments that could push up deficits when the economy turns. ($1 = 21.7700 Czech crowns) (Reporting by Robert Muller, writing by Jason Hovet, editing by Larry King)

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