Zeman and Babiš Devalue Debt for 4,000,000 CZK. It Comes Back in 32 Minutes and 51 Seconds


It seemed like great news. In the middle of December, the Czech President Miloš Zeman and the Minister of Finance Andrej Babis ceremoniously destroyed treasury bonds worth CZK 4 million. The bonds were bought for the money president and his supporters had collected for this purpose (the presidential debt fund). The Czech public finance debt is reduced, all comments said and their authors were satisfied. I was not… Why? Because in the time when Minister of Finance Andrej Babiš left the Prague Castle (the seat of the president) and took his limo back to his office, the debt increased by the same amount.

Really? Yes, a little bit of math gives us the answer to that. The official document, Fiscal Outlook, which is published twice a year by analysts of the Ministry of Finance, shows that in 2014 the general government revenues (central government + local budgets + social security funds) reached 1705 billion CZK. In the same period of time, the general government expenditures are forecasted on over 1769 billion CZK.

Let’s convert the data on the basis of “seconds”. Every second, Czech public institutions generate revenues of 54,065 CZK, but every second they spend 56,095 CZK. This means that in every second, the indebtedness of the Czech taxpayers increases by 2,029 CZK. It’s quite interesting, isn’t it?

So let’s move on and suppose that after the ceremony of devaluating the bonds worth 4 million CZK, the Minister of Finance Andrej Babiš was spending 10 minutes on the Q/A media session. After that he was fulfilling formal obligations at the VIP reception. Then he took the limo and drove from the Prague Castle around Marianske hradby and through Chotkovy sady to Klárov, then right into Valdštejnská Street and Tomášská Street and, finally, turned left into the Letenská Street, where the Ministry of Finance of the Czech Republic is seated (see the map). Let’s suppose that even ministerial car with “flashlight beacon” may break clogged streets of the Prague 1 no faster than in 15 minutes door-to-door. If we put these parts of Babiš’s time-schedule together, we get 35 minutes (10 + 10 + 15).

During this time, the net debt of the Czech Republic increased by 4,261,796 CZK.

Yes, it actually did. The debt which was devaluated at the Prague Castle, has been back in 32 minutes and 51 seconds. And then again. And again. And again. During the time you are reading this article, the Czech debt has increased by more than 180,000 CZK. Well, this is the Czech public finance reality show, not posh media-conferences organized by president or minister of finance.