Czech public debt hits record 3.9 trillion crowns in nine months

Czechia's public debt rose by 204.6 billion crowns over the first three quarters of the year, reaching a record 3.882 trillion crowns. The Ministry of Finance reported the figure in its quarterly debt management report. In theory, every resident of the country owes 356,046 crowns. By the end of the third quarter, debt stood at 43.9 percent of GDP, up from 42.9 percent at the start of the year.

The ministry attributes the increase mainly to sales of government bonds to repay earlier debts and cover the current budget deficit. At the end of September, the deficit stood at 194.5 billion crowns. Under the July strategy, debt is expected to climb to 3.991 trillion crowns, or 44.4 percent of GDP, by the end of the year.

What servicing the debt costs

Net debt service costs over the three quarters came to 74 billion crowns. For the whole year, the ministry estimates they will reach 110 billion, compared with 98.1 billion last year. Costs are rising along with the size of the debt, as well as because of a global rise in government bond yields.

The average maturity of Czech government bonds is 6.2 years, close to the ministry's strategic target of 6.5 years. About two fifths of the bonds are held by local banks, around 28 percent by foreign investors, and 5 percent by Czech households. Their share has grown since the July issue of Republic Bonds: at the end of the first half of the year it was 3.1 percent.

Public debt is made up of government debts and arises mainly from accumulated budget deficits. It is financed through treasury bills, government bonds, direct loans or loans from the European Investment Bank.

Around Prague, based on reporting by seznamzpravy.cz