Regions and municipalities accumulate funds instead of investing, says Budget Council

The National Budget Council (NR) has criticized regions and municipalities for accumulating vast sums of money in bank accounts rather than using the funds for investment projects, which it deems inefficient. According to the Council’s report on the 2023 budgetary responsibility rules, local governments are allowing these funds to lose value due to inflation.

At the end of 2023, regions and municipalities had a total of CZK 408.8 billion deposited in bank accounts, including CZK 65.4 billion from regional savings and CZK 139.1 billion from Prague. Over the past decade, the amount in these accounts has quadrupled, while inflation has risen by 51%. The Council highlighted that only CZK 21.5 billion of a CZK 333 billion surplus over the last decade was used for investments, with the rest sitting idle in bank accounts.

The report also noted a positive trend in municipal debt, which decreased by CZK 3 billion to 62.8 billion crowns in 2023. Municipalities with debt exceeding 60% of their income fell by 20 to 565. Additionally, 3,168 municipalities were entirely debt-free last year.

The Council emphasized that despite adjustments to tax revenue sharing, self-government revenues will rise by 3.9% in 2024, with mid-sized municipalities benefiting the most, while the smallest may see a slight decline.

The NR is an independent body tasked with assessing the compliance of state and public institutions with budgetary rules.

Source: CTK