Chart 1 illustrates that the Czech Republic's total consolidated assets have been growing since 2016, with the pace of growth accelerating significantly since 2021. Chart 1 also shows that since 2022, the growth in total consolidated assets has been driven mainly by growth in fixed assets. There was a significant change in fixed assets between 2021 and 2022, which was mainly due to a one-off write-off of a negative consolidation difference and an increase in the value of structures and unfinished non-current tangible assets. A faster pace of growth in fixed assets can also be observed between 2023 and 2024, reflecting an increase in investment activity in the Czech Republic. The most significant change in current assets occurred between 2020 and 2021, when there was an increase of 47.7%. This increase was mainly due to fixed-term operations and options (mainly comprising market prices of emission allowances, electricity, and gas of the CEZ Group, with a year-on-year increase of CZK 439.7 billion). Since 2022 onwards, the year-on-year increase in current assets has been more moderate.

*Gross is the value that fixed assets had at the time they were put into use.

Chart 2 illustrates that the value of completed construction projects grew annually, reflecting the investment activity of state consolidated entities. Until 2019, the year-on-year growth rate of the value of completed construction projects also increased. In 2020, however, the growth rate slowed by 0.9% to 3.6%, which was caused by a slowdown in investment activity triggered by the COVID-19 pandemic. From 2021, the growth rate accelerated again, reaching 6.6% year-on-year in 2024, the highest figure since 2016. The development of the value of completed construction projects is influenced not only by the volume of construction but also significantly by inflation. The time lag between the start of large construction projects (e.g. transport) and their completion, which can be several years, also plays an important role.

The amount of cash holdings in the accounts of state consolidated entities as of 31 December 2024 was CZK 1,144.7 billion (up CZK 96.0 billion, or 9.2%, year-on-year). These are mainly cash holdings in bank accounts and term deposits. In 2024, the cash holdings of state consolidated entities covered a total of 69.5% of the Czech Republic's current liabilities (66.7% in 2023). This represents an improvement in the immediate liquidity ratio, reflecting the ability to service current liabilities. In 2022 and 2023, cash holdings were exposed to exceptionally high inflation (15.1% and 10.7%, respectively), which led to their partial devaluation.

The cash holdings of local government units (municipalities and regions), including allowance organisations, and voluntary associations of municipalities, including allowance organisations, reached CZK 539.3 billion in 2024 (CZK 490.8 billion in 2023). During 2024, the volume of cash holdings of local government budgets increased by CZK 48.5 billion, i.e. by 9.9% (in 2023 by CZK 77.5 billion, i.e. by 18.7%). This development indicates a slowdown in the growth rate of cash holdings of local government budgets, partly due to higher investment activity by municipalities. The long-term growth in the volume of these cash holdings is due to the fact that the income of local government units exceeds their budgetary expenditures, including debt repayments.

Of the state consolidated entities, the City of Prague (excluding districts) reported the highest amount of cash holdings, namely CZK 137.4 billion (up CZK 18.0 billion year-on-year, i.e. +15.0%). The largest part of the cash holdings of the City of Prague (excluding districts) was concentrated in the basic current account of local government units (CZK 87.2 billion) and long-term deposits (CZK 36.5 billion). These savings come mainly from income from taxes and fees, rentals, transfers, and sales of assets. In 2024, the City of Prague's cash holdings exceeded its current liabilities by 21.3 times (17.2 times in 2023). The municipalities' cash holdings (excluding the City of Prague) exceeded their current liabilities by only 3.5 times in 2024 (3.7 times in 2023).

Chart 3 illustrates a long-term upward trend in cash holdings in the accounts of state consolidated entities, with a more intense pace of growth in 2021 and 2022. In 2023, the growth in cash holdings slowed down. In 2024, the growth rate of cash holdings accelerated again, with a year-on-year increase of 9.2%. The most significant movements were recorded in short-term and long-term deposits, which increased by CZK 89.7 billion year-on-year, i.e. by 109.7%. This increase was mainly due to the municipal part, where term deposits grew by CZK 57.7 billion year-on-year, i.e. by 113.7%. Municipalities sought to protect temporarily unused cash holdings from the effects of inflation. The development of cash holdings in the municipal part suggests that investment potential is not being fully exploited here.

In contrast, the cash holdings of health insurance companies decreased year-on-year from CZK 55.6 billion to CZK 48.2 billion, which means that health insurance companies operated with a deficit of CZK 7.4 billion in 2024 (compared to a deficit of CZK 1.6 billion in 2023). This development indicates a deterioration in the financial result of health insurance companies.

Information on Equity and Liabilities (External Resources)

As at 31 December 2024, total liabilities and equity amounted to CZK 7,990.8 billion, consisting of 27.3% of equity and 72.7% of liabilities (external resources). The government part (including health insurance companies) accounted for debts of CZK 5,505.2 billion, while the municipal part accounted for debts of CZK 307.6 billion. In 2024, there was a slight slowdown in the growth of liabilities (external resources) (i.e. a slight slowdown in the growth of the Czech Republic's debt) and, at the same time, a positive turnaround in the development of equity, partly as a result of a year-on-year improvement in the consolidated economic result (an improvement of CZK 163.7 billion, i.e. from a loss of CZK 87.1 billion in 2023 to a profit of CZK 76.6 billion in 2024).

The Czech Republic's liabilities (external resources) amounted to CZK 5,812.8 billion, an increase of CZK 398.3 billion, or 7.4%, year-on-year, representing a 0.6% slowdown in the growth of the Czech Republic's debt year-on-year.

Non-current liabilities from issued bonds, totalling CZK 3,269.2 billion, accounted for the largest share of liabilities (external resources). Of this amount, long-term government bonds issued by the Ministry of Finance reached CZK 3,048.0 billion (after consolidation). Year-on-year, the value of long-term government bonds issued by the Ministry of Finance increased by CZK 186.2 billion (CZK 299.4 billion in 2023) as a result of financing the government's borrowing needs, in particular to cover the state budget deficit for 2024, which amounted to CZK 271.4 billion. This financing is carried out primarily through the sale of long-term government bonds denominated in CZK on the domestic bond market in the form of auctions organized by the Czech National Bank. Another significant item of liabilities (external resources) was long-term loans amounting to CZK 384.0 billion, a significant part of which was attributable to the Ministry of Finance (CZK 178.3 billion).

Provisions, which are part of liabilities (external resources), reached CZK 323.1 billion (up CZK 23.2 billion, or 7.7%, year-on-year). The largest volume of provisions was held by the CEZ Group (mainly nuclear provisions related to the decommissioning of nuclear facilities, temporary storage, and subsequent permanent disposal of spent nuclear fuel and irradiated reactor components). Significant provisions were also held by the Ministry of Finance (provisions for environmental remediation).

Chart 4 illustrates that in 2020 there was a change in the trend in the development of equity and liabilities (external resources) (an increase in debt and a simultaneous decrease in equity as a result of operating losses). This negative trend continued in 2021, with the rate of debt growth increasing further. In 2022, a positive development in equity and liabilities (external resources) is already apparent, but this did not continue in the following year, 2023. The decline in equity in 2023 was caused, among other things, by a deterioration in the consolidated economic results of the Czech Republic (an increase in losses from CZK 57.1 billion in 2022 to CZK 87.1 billion in 2023, i.e. by CZK 30.0 billion). The slight acceleration in the growth rate of liabilities (external resources) in 2023 (+0.7%) was mainly related to an increase in current liabilities, which, on the contrary, decreased year-on-year in 2022. In 2024, there was another turnaround in the development of equity, partly due to an improvement in the consolidated economic result (an improvement of CZK 163.7 billion, i.e. from a loss of CZK 87.1 billion to a profit of CZK 76.6 billion. The growth rate of liabilities (external resources) slowed slightly in 2024 (by 0.6%), mainly due to a slowdown in the growth rate of non-current liabilities from issued bonds (from 11.5% in 2023 to 8.3% in 2024).

Non-current liabilities from issued bonds

Non-current liabilities from issued bonds arise from the financing of the state budget deficit. Chart 5 illustrates that a turning point occurred in 2020 and the upward trend continued in subsequent years. The need for higher government bond issuance was initially related to the COVID-19 pandemic and subsequently to the war in Ukraine. From 2023 onwards, these factors no longer have a significant impact on the volume of government bonds issued. Chart 5 also illustrates that non-current liabilities from issued bonds accounted for the majority of the Czech Republic's total debt in 2024 (56.2%). It is important to note that, in addition to banks, investment funds, pension funds, and insurance companies, government bonds are also held by state consolidated entities (e.g. the CEZ Group). This represents mutual relations within the Czech Republic consolidation group which were therefore eliminated (a total of CZK 57.2 billion was eliminated). The value of non-current liabilities from issued bonds is therefore lower in the consolidated financial statements of the Czech Republic than in documents that are not compiled on a consolidated basis (e.g. the State Final Account).

Information on Costs and Revenues

The Czech Republic's total costs for the 2024 accounting period amounted to CZK 3,620.6 billion (down 1.0% year-on-year). Total revenues reached CZK 3,705.6 billion (up 3.6% year-on-year). Revenue growth and cost reductions led to a profit of CZK 76.6 billion in 2024.

Operating costs accounted for the largest share of total costs in 2024, amounting to CZK 2,045.9 billion, i.e. 56.5% of total costs (up CZK 10.1 billion year-on-year, i.e. +0.5%). The most significant item was wage costs of CZK 626.7 billion (up CZK 34.9 billion year-on-year, i.e. +5.9%). Related costs of statutory social insurance paid by the employer were eliminated within mutual relations.

Wage costs rose by 12.2% year-on-year for business corporations, by 4.2% for municipalities and their allowance organisations, and by 1.2% for state organisational units.

The development of wage costs is shown in chart 6. In the years mentioned, wage costs increased by an average of 8.2% per year as a result of growth in wages, salaries, and the number of employees in the Czech Republic consolidation group. The highest year-on-year growth rate in wage costs was achieved in 2018 (+12.4%); partly in connection with an increase in public sector pay scales. In the following years, the growth rate gradually slowed to 2.7% in 2022. In 2023, the growth rate of wage costs accelerated again to 7.4%, which was related to an increase in public sector pay scales in Q3 2022. In 2024, the growth rate of wage costs declined to 5.9%. Overall, wage costs increased by CZK 290.7 billion between 2016 and 2024, i.e. by 86.5% (cumulative inflation between 2016 and 2024 reached 51.4%).

Another significant year-on-year increase was recorded in the costs of health insurance companies (+CZK 27.7 billion, i.e. +13.2%), due to rising costs associated with healthcare provided by healthcare facilities that are not part of the Czech Republic consolidation group. These include, for example, private healthcare facilities and general practitioners.

Conversely, the most significant year-on-year decline was in the cost of goods sold (-CZK 25.5 billion, i.e. -12.1%), which was mainly due to a decline at the CEZ Group (-CZK 20.1 billion, i.e. -30.7%), mainly due to lower costs of purchasing electricity and gas for resale. Another significant year-on-year decline was recorded in other operating costs (-CZK 20.4 billion, i.e. -18.5%). This decline was mainly related to developments at OTE, a.s. (-CZK 30.5 billion, i.e. -59.5%), where compensation related to energy price caps was reported in 2023.

Financial costs reached CZK 219.4 billion in 2024 (down CZK 61.8 billion year-on-year, i.e. -22.0%). The decline was mainly influenced by lower costs from the sale of securities and shares (-CZK 28.9 billion), which was related to the sale of a lower volume of securities by the CEZ Group (-CZK 27.7 billion). The decrease in foreign exchange losses (-CZK 18.3 billion) also had a significant impact, primarily at the Ministry of Finance (-CZK 16.4 billion), which was related to lower foreign exchange losses arising in connection with operations in the state debt chapter. The most significant item of financial costs was interest in the amount of CZK 145.2 billion (year-on-year +CZK 4.7 billion, i.e. +3.3%). The largest share of this was attributable to the Ministry of Finance, at CZK 119.3 billion (down CZK 0.8 billion, or 0.7%, year on year). The interest reported by the Ministry of Finance was mainly related to servicing the national debt. Its year-on-year decline was mainly due to a reduction in the interest rate on anti-inflationary government bonds as a result of lower inflation.

Chart 7 illustrates that interest on liabilities (external resources) fluctuated slightly until 2019. From 2020, it began to grow year-on-year, with more pronounced growth in 2022 and 2023. The main reasons were higher costs of servicing the government debt due to its increase, interest payments on inflation-linked government bonds, and worsening interest rate conditions on financial markets. In 2024, there was a significant slowdown in the growth rate of interest on liabilities (external resources) (by 19.1%), mainly due to a decline in interest on inflation-linked government bonds.

Transfer costs reached CZK 1,355.3 billion in 2024 (up CZK 16.7 billion, or 1.2%, year on year). The recipients of these transfers were entities outside the Czech Republic consolidation group, mainly natural persons. The largest part of the transfers consisted of social benefits of an insurance nature related to pension insurance (especially old-age and disability pensions), followed by sickness benefits and unemployment benefits. In 2024, the Czech Social Security Administration provided the most funds for social benefits, amounting to CZK 742.4 billion (up CZK 26.1 billion year-on-year, i.e. +3.6%). Of this, pensions accounted for CZK 694.5 billion (up CZK 24.2 billion year-on-year, i.e. +3.6%). Another significant provider of social benefits was the Labour Office of the Czech Republic, which paid out CZK 147.1 billion in 2024 (up CZK 8.8 billion year-on-year, i.e. +6.4%). These benefits include, for example, housing allowances, material need assistance benefits, care allowances, and unemployment benefits.

Part of the transfer costs also consisted of retirement benefits for members of the armed forces and security forces after the end of their service. The largest providers of retirement benefits were the Ministry of the Interior, with CZK 7.1 billion (up CZK 0.3 billion year-on-year, i.e. +3.9%), the Ministry of Defence in the amount of CZK 3.3 billion (up CZK 0.1 billion year-on-year, i.e. +3.4%) and the Prison Service of the Czech Republic in the amount of CZK 1.1 billion (up CZK 0.1 billion year-on-year, i.e. +5.4%).

Chart 8 illustrates the annual increase in transfer costs. The most significant growth was recorded in 2020, when these costs increased by CZK 165.3 billion year-on-year, i.e. by 17.7%. This increase was mainly due to higher care allowances, compensation to businesses in connection with the COVID-19 pandemic and higher pension benefits as a result of pension indexation. In 2021 and 2022, growth was significantly slower, i.e. 4.6% in 2021 and 3.0% in 2022. In 2023, there was another significant increase in transfer costs, mainly due to the growth in pensions, which rose by CZK 95.5 billion year-on-year, i.e. by 16.6%. In 2024, transfer costs increased by CZK 16.7 billion, i.e. by 1.2%, which represented a slowdown in growth of 11.9%. This was due to the fact that pensions increased by only CZK 24.2 billion, i.e. by 3.6%, compared to 2023.

Revenues from operations reached CZK 1,220.6 billion in 2024 (up CZK 74.2 billion year-on-year, i.e. +6.5%). Significant items of revenues from activities include revenues from public health insurance in the amount of CZK 305.7 billion (year-on-year +CZK 19.0 billion, i.e. +6.6%). The growth in revenues from public health insurance was caused by an increase in the volume of wages and salaries paid. Another significant item was revenue from the sale of own products in the amount of CZK 258.6 billion (up CZK 11.8 billion year-on-year, i.e. +4.8%). This increase was mainly influenced by the CEZ Group, whose revenues from the sale of own products increased by CZK 10.9 billion, i.e. by 7.2%, mainly due to higher sales of electricity, gas, heat, and coal. On the contrary, revenues from goods sold decreased year-on-year to CZK 189.2 billion (-CZK 13.8 billion, i.e. -6.8%). The decline was mainly attributable to OTE, a.s. (-CZK 12.6 billion, i.e. -11.6%), due to lower revenues from the settlement between contractual and metered values for electricity and gas. The most significant increase in total operating revenues was recorded in revenues from the sale of services (year-on-year +CZK 44.8 billion, i.e. +22.4%), mainly due to higher revenues from distribution services of the CEZ Group (+CZK 27.2 billion, i.e. +43.6%).

Financial revenues in 2024 reached CZK 147.9 billion (a year-on-year decrease of CZK 104.3 billion, or 41.4%). The significant decline in financial revenues was mainly due to a decrease in revenues from fair value revaluation (-CZK 27.3 billion), caused in particular by a decline at the CEPS Group (-CZK 15.9 billion), which was related to extraordinary revenues from 2023 associated with the acquisition of companies. The decline in financial revenues was also influenced by a decrease in revenues from the sale of securities and shares (-CZK 23.3 billion) due to the sale of a lower volume of securities by the CEZ Group (-CZK 27.9 billion) and a decrease in interest revenues (-CZK 19.5 billion), particularly at the Ministry of Finance (-CZK 15.1 billion), mainly due to a decrease in the Czech National Bank's base interest rates, which was reflected in a decrease in revenues from investment operations within the framework of treasury liquidity management.

Total revenues from taxes and fees, including shared taxes and fees, reached CZK 1,937.3 billion in 2024, representing a year-on-year increase of CZK 136.8 billion, or 7.6%. Of this, revenues from taxes and fees, which constitute a significant part of state budget income, reached CZK 1,470.4 billion. Revenues from shared taxes and fees, which are a source of income for regional and municipal budgets and the State Fund for Transport Infrastructure (SFTI), amounted to CZK 467.0 billion (see chart 9).

The year-on-year increase was mainly driven by social security revenues, which rose by CZK 57.1 billion, or 10.3%. This growth was driven not only by an increase in wages and salaries, but also by legislative changes that came into effect in 2024. These included, for example, the introduction of sickness insurance contributions paid by employees and an increase in the assessment base for self-employed persons. Revenues from personal and corporate income tax also contributed to the year-on-year change, increasing by a total of CZK 42.5 billion, or 9.5%. This growth was influenced, among other things, by wage and salary growth, an increase in the minimum wage, employment growth, and the introduction of a temporary tax on unexpected profits (the so-called windfall tax) as a source of financing for state aid to help with high energy prices. Revenues from value added tax increased by CZK 16.1 billion, i.e. by 2.8%. The year-on-year increase was mainly influenced by an increase in consumer prices.

Taxes and fees are collected mainly by the General Financial Directorate, the General Directorate of Customs, and the Czech Social Security Administration. The percentage of total tax and fee revenues, including sharing, has not changed significantly year-on-year.

Chart 9 illustrates the development of total revenues from taxes and fees, including shared taxes and fees. Until 2019, there was a noticeable annual increase. In 2020, there was a year-on-year decline of 4.4%, which was caused by the impact of the COVID-19 pandemic and exacerbated by measures to support legal entities and self-employed individuals. The abolition of the real estate acquisition tax also contributed to the decline. Since 2021, an upward trend has been evident again. In 2024, there was a year-on-year increase of 7.6%, which was mainly due to higher social security revenues (+10.3%) and higher revenues from personal and corporate income tax (+9.5%). Revenues from taxes such as value added tax, real estate tax, gambling tax, and tobacco tax also continued to grow. As a result of consolidation operations and the time lag between tax collection and the reporting of tax revenue, the values of revenue from taxes and fees, including shared taxes and fees, differ from the values reported, for example, in the State Final Account. Revenues from shared taxes and fees, which are the main source of income for regions and municipalities, increased by CZK 213.1 billion, or 83.9%, between 2016 and 2024. In contrast, revenues from taxes and fees, which are the main source of state budget income, increased by CZK 437.5 billion, or 42.4%, over the same period.

Revenues from transfers in 2024 reached CZK 399.7 billion (up CZK 23.7 billion year-on-year, i.e. +6.3%). The most significant increase was reported by the Ministry of Finance (+CZK 27.0 billion, i.e. +150.2%) and the Ministry of Agriculture (+CZK 15.6 billion, i.e. +60.1%), due to higher revenues from grants received from the budget of the European Union. On the other hand, there was a decline at the Ministry of Transport (-CZK 27.2 billion, i.e. -49.2%), mainly due to a lower number of applications submitted for financing projects from the National Recovery Plan.

Chart 10 shows the development of the Czech Republic's total consolidated costs and revenues in 2016-2024. Costs and revenues are reported in the period to which they relate in terms of substance and time, regardless of cash flows.

Chart 10 shows a long-term trend of gradual growth in both costs and revenues in the Czech Republic until 2019. In 2020, the rate of growth in costs accelerated compared to revenues, mainly due to the COVID-19 pandemic, which was the main cause of the loss incurred in the 2020 accounting period. In 2022, an improvement in the Czech Republic's economic result can be observed, i.e., there was a decrease in the difference between costs and revenues, which led to a year-on-year reduction in losses of CZK 136.8 billion. In 2023, this trend of improving economic result in the Czech Republic did not continue. Mainly as a result of an increase in transfer costs and financial costs, there was a year-on-year increase in losses of CZK 30.0 billion. In 2024, there was a turnaround in the Czech Republic's economic result (from a loss of CZK 87.1 billion in 2023 to a profit of CZK 76.6 billion in 2024). This turnaround was mainly due to an increase in revenues (especially revenues from taxes and fees and revenues from activities) and a simultaneous decrease in costs (financial costs). More detailed reasons for the change in the consolidated economic result for the current accounting period are provided in the chapter below.

Information on the Consolidated Economic Result

The Czech Republic reported a profit of CZK 76.6 billion in 2024. The government part (including health insurance companies) recorded a loss of CZK 2.6 billion, while the municipal part posted a profit of CZK 79.2 billion.

In 2024, there was a year-on-year improvement in the consolidated economic result of CZK 163.7 billion (an improvement of CZK 166.9 billion in the government part and a deterioration in the municipal part of CZK 3.2 billion).

The favourable development in the government part was mainly due to an improvement in the economic result of the General Financial Directorate (+CZK 72.6 billion), primarily as a result of higher tax collection, and an improvement in the economic result of the Czech Social Security Administration due to higher social security collection (+CZK 28.1 billion). Although higher revenues from taxes and fees contributed to the improvement in the consolidated economic result, they did not lead to a reduction in the state budget deficit due to increased investment activity. Another positive factor was the improved consolidated economic results of business corporations in the government part (+CZK 67.0 billion). The consolidated economic result in the government part was also positively affected by the fact that the one-off cost factors that influenced 2023 no longer had an impact in 2024. These included, for example, a year-on-year reduction in costs caused by the write-off of receivables (impact on the economic result in 2024 compared to 2023 +CZK 17.6 billion) and the end of depreciation of motorways and first-class roads (impact on the economic result in 2024 compared to 2023 +CZK 16.5 billion).

The difference between the state budget deficit of CZK 271.4 billion (compiled on a cash basis, i.e. based on the difference between cash income and cash expenditures) and the loss in the government part of CZK 2.6 billion (reported on an accrual basis, i.e. based on the difference between revenues and costs) is mainly due to investments in structures and movable assets and to the different range of entities affecting these results. While in the state budget, capital cash expenditure has an immediate effect when it is realized (by reducing the balance of cash holdings in bank accounts), in accounting using the accrual basis, its impact is reflected in the economic results gradually through costs (depreciation) over the entire period of use of the assets. In 2024, the consolidation group recorded a year-on-year increase in fixed assets (gross) of CZK 201.4 billion for state organisational units, state allowance organisations, state enterprises, and state organisations. The growth in fixed assets represented a capital expenditure of the state budget, which did not affect the economic results of the consolidation group. This means that the increase in tax revenues did not lead to a proportional increase in costs, but created room for higher investment activity by the state, which took advantage of it. The example of fixed assets clearly demonstrates that two different methodological bases for calculating the economic results of an accounting entity for a given period can coexist. Each of these bases has its own informative value, based on a different methodological approach. It is therefore relevant to consider both pieces of information precisely and compare them with each other.

If we proceed to explain the year-on-year change in the consolidated economic result for the current accounting period purely from the perspective of the development of individual groups of cost and revenue items in the Consolidated Profit and Loss Account (Income Statement), we find that this development was mainly influenced by an increase in revenues from taxes and fees, including shared taxes and fees (+CZK 136.8 billion). The increase in taxes and fees was mainly due to higher revenues from social insurance (+CZK 57.1 billion) as a result of growth in wages and salaries, an increase in revenues from personal and corporate income taxes (+CZK 42.5 billion) in connection with wage and salary growth, an increase in the minimum wage, growth in employment, and the introduction of a temporary tax on windfall profits as a source of funding for state aid to help with high energy prices. The growth in value added tax revenue (+CZK 16.1 billion), caused by higher consumer prices, also had a positive effect.

Revenues from operations, which exceeded operating costs, also contributed to the improvement in the consolidated economic result for the current accounting period, with a net impact on the change in economic results of +CZK 64.1 billion. This was mainly due to growth in revenues from the sale of services (+CZK 44.8 billion), which was primarily related to higher revenues from the distribution services of the CEZ Group. At the same time, there was a decrease in other operating costs at OTE, a.s. (-CZK 30.5 billion), mainly due to a decrease in compensation related to energy price caps. Costs from written-off receivables also decreased, primarily at the Ministry of Finance (-CZK 17.3 billion), where an extraordinary write-off of receivables was carried out in 2023. This concerned the waiver of a receivable from imAGe Alpha, a.s., in liquidation, in the amount of CZK 13.0 billion due to the company's deletion from the Commercial Register, and a receivable from ČPP Transgas, s.p., in the amount of CZK 4.6 billion based on a settlement agreement. There was also a reduction in costs from donations and other free transfers at the Ministry of the Environment (-CZK 13.4 billion) in connection with the decline in free allocations of emission allowances.

Higher growth in transfer revenues, exceeding the growth in transfer costs, also contributed to the improvement in the consolidated economic result for the current accounting period, with a net impact on the change in the economic result of +CZK 7.0 billion, due to higher drawdown of subsidies from the European Union budget (+CZK 23.7 billion) and a slowdown in pension growth (+CZK 24.2 billion in 2024 compared to +CZK 95.5 billion in 2023).

The consolidated economic result for the current accounting period in 2024 was negatively affected compared to 2023 by a greater decline in financial revenues than in financial costs. This development had a net impact on the change in profit of -CZK 42.6 billion. The main reason was a decline in fair value revaluation revenues at the CEPS Group (-CZK 15.9 billion), where extraordinary revenues from company acquisitions did not continue compared to 2023. Another significant factor was the decline in interest revenues at the Ministry of Finance (-CZK 15.1 billion) as a result of the reduction in the Czech National Bank's base interest rates, which was reflected in lower revenues from investment operations within the framework of treasury liquidity management.

The share in the profit or loss in equity accounting and the minority interest in the profit or loss for the current accounting period (-CZK 1.6 billion) had a minor impact on the year-on-year change in the consolidated economic result for the current accounting period.

Chart 11 illustrates that the Czech Republic recorded positive economic results between 2016 and 2019. A turnaround occurred in 2020, when a loss was reported for the first time since 2016. Between 2020 and 2023, the Czech Republic recorded losses. The losses in 2020 and 2021 were mainly caused by the COVID-19 pandemic, which had a negative impact on the economy as a whole. This was also reflected in the state budget, which ended 2020 with a deficit of CZK 367.5 billion and 2021 with a deficit of CZK 419.7 billion.

In 2022, there was a year-on-year decrease in losses of CZK 136.8 billion. This development was mainly due to a higher profit of CZK 147.2 billion for the General Financial Directorate as a result of increased tax collection and a significant increase in the profit of the CEZ Group of CZK 49.3 billion as a result of rising electricity and gas prices. In contrast, the Ministry of Finance reported a year-on-year increase in losses of CZK 66.1 billion, mainly due to higher costs from shared taxes and fees and financial costs associated with servicing the national debt. The loss in 2022 was related, among other things, to the energy crisis, high inflation, and the war in Ukraine.

In 2023, there was a year-on-year increase in the loss of CZK 30.0 billion due to a combination of several factors. The most significant of these were the growth in pensions and costs associated with compensation resulting from the capping of electricity and gas prices. On the other hand, higher subsidies from the European Union budget and higher revenues from taxes and fees had a positive effect. In 2024, due to an increase in revenues and a decrease in costs, the Czech Republic's economic result returned to a profit of CZK 76.6 billion

Accounting Consolidation in the Context of Government Reporting

Data on the public finances of the Czech Republic are contained not only in the consolidated financial statements of the Czech Republic, but also in other documents, the most important of which are the State Final Account of the Czech Republic compiled by the Ministry of Finance and statistical data on the general government sector compiled by the Czech Statistical Office.

Each of these documents monitors and evaluates information on the Czech Republic's public finances (e.g. cash flows, financial position, operating results) from a different perspective. As a rule, the composition of the accounting entities whose data are processed also differs. This is because this information serves different purposes, and its scope reflects this. The values reported in these documents therefore differ and, due to the use of different methodological approaches, are not comparable with each other.

For more information on the consolidated financial statements of the Czech Republic, please contact the Ministry of Finance at konsolidace@mfcr.cz.

¹ The values from the accounting records of state consolidated entities are included in the consolidated financial statements of the Czech Republic after consolidation operations have been performed. Therefore, the values in this report may differ from those stated in the financial statements of state consolidated entities.
² The consolidated profit or loss for the current accounting period is not simply the difference between costs and revenues, but is further adjusted for minority interests and shares in profit or loss using the equity method.