The Czech Republic Funding and Debt Management Strategy for 2022 - Update
The Ministry of Finance presents to the public the update of The Czech Republic Funding and Debt Management Strategy for 2022, which was originally published on 6 January 2022 and submitted as preliminary for the provisional budget period, following the approval of Act No. 57/2022 Coll., on the State Budget of the Czech Republic for 2022, which entered into force on 19 March 2022. Its main aim is to specify the total financing needs in 2022 and in the medium term.
For 2022, the planned financing needs amount to CZK 552.1 billion, i.e. approximately 8.3% of GDP. Its final amount will primarily depend on the actual state budget performance and also on the actual amount of exchange operations and buy-backs of government bonds carried out in this year, in particular for the purpose of refinancing risk management.
On 16 March 2022, the European Central Bank announced the approval of the linking of the Central Securities Depository Prague to the foreign depositary Euroclear Bank in Belgium, which primarily allows EUR-denominated government bonds issued on the domestic market under Czech law to be classified as eligible assets in Eurosystem credit operations. These EUR-bonds are competitive with bonds issued in euro area countries and the Czech Republic is only the second non-euro area country in Europe after Denmark, whose local central depository has achieved this status (CSD Prague: ECB eligible link Euroclear Bank).
The Strategy Update also reflects the initially unexpected development of the situation in Ukraine and its impact on the domestic and foreign financial markets, and contains the initial measures in the area of short-term adjustment of the government‘s issuance activity in local currency in terms of maturity structure and interest rate mix starting in April 2022. Due to the continuing uncertainty, the Ministry of Finance keeps the option to introduce updates of the Strategy on the basis of current financing needs development, especially with regard to the state budget performance, development of available funds of the state treasury and development on financial markets, at the end of the first half of this year or within The Czech Republic Debt Management Quarterly Report - 1st - 3rd Quarter of 2022 or in other terms.