June 3, 2020 / 2:34 PM / a month ago

UPDATE 1-Czech budget gap may head even higher in 2020, says finance minister

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PRAGUE, June 3 (Reuters) - The Czech central state budget deficit could reach up to 500 billion crowns ($21.03 billion) in 2020, more than 12 times the government’s original plan due to the impact of the coronavirus outbreak, Finance Minister Alena Schillerova said on Wednesday.

The government is currently aiming for a budget gap of 300 billion crowns this year after getting lawmaker approval in April to raise it from the target of 40 billion crowns.

In an interview on Czech Television, Schillerova said she could not rule out heading to lawmakers again as spending rises to ease the economic strain of the pandemic and revenue shrinks.

“We can get close (to that figure),” Schillerova said when asked if the deficit was heading toward half a trillion crowns.

A gap that large would more than double the previous record of 192.4 billion crowns seen in 2009 during the global financial crisis.

The state budget gap stood at 157.4 billion crowns at the end of May, with higher spending for state wages and pensions promised before the crisis adding to higher expenditures to fight the impact of the pandemic.

Schillerova said the state was still facing a rising bill for a scheme to compensate workers at firms hurt by the crisis or aid to self-employed, among other measures and spending.

The central European country of 10.7 million has reported a lower number of cases - less than 10,000 - of the new coronavirus than neighbours in western Europe.

But the shutdowns of shops and many large factories in March and April have taken a toll even as the economy reopens again. The central bank expects the economy to shrink 8% in 2020, a more pessimistic view than the finance ministry’s latest outlook.

$1 = 23.7740 Czech crowns Reporting by Jason Hovet, Editing by Jan Lopatka and Ed Osmond

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