We are very often presented with numerous references to government budget in the local media. However, the budget´s very nature and the overall ambiguity of politicians create an illusion that it is an extremely complicated matter, which can only be understood by a few chosen ones in the whole country. The opposite is true. Government budget and the whole of public finance stand on the same basic principles such as family budget. Both comprise two sides – income and expenditures. When the expenditures exceed income, the debt is created. In the long term, it is not sustainable to create debt and constantly borrow in order to pay it off. One day, the time will come, when the government (just like any family) needs to repay the debt with interest.
Unfortunately, the Czech government (like many others around the world) does not follow this basic principle. Over the past two decades, the government debt as a share of GDP has steadily increased from 13.9% in 1993 to the predicted 49.3% in 2013 (that is, by 35.4% percentage points). Such radical increase is not that surprising if we compare the progress of both, the debt and GDP. While GDP increased by 855.57 billion Kč (that is 314% increase of the amount in 1993), the debt increased by 1610 billion Kč (which corresponds to 1114% increase of the amount in 1993). At first glance, it should be apparent that such development is not sustainable in the long run.
In order to bring attention to these issues, Liberalni institute created project Debtville in cooperation with Friedrich Naumann Stiftung and institutes from 4liberty group. Its purpose is to provide all the necessary information in an easy, comprehensive and visually appealing way.
Project Debtville presents budgetary expenditures of the Czech Republic in a form of a city standing above a giant debt hole. The debt is so large that every citizen is burdened with 152 361 Kč (in 2012). The height of individual skyscrapers represents expenditures demanded by selected ministries (budget chapters) from government budget. In order to consider this information in the proper context, some additional graphs are provided (such as debt progress, information about ruling Prime ministers, economic growth and deficit of government budget in given years).
Project Debtville for the Czech Republic is available at web address debtville.cz. In the course of the next few months, local Debtvilles will be available in other eastern European and central European states.