Europe’s most stable economy says it is time to share wealth

Bloomberg

The Czech Republic must distribute its growing wealth more widely, and even a cooler economy won’t stop higher social expenditure and investment, according to the country’s finance chief.
The richest former Soviet satellite is relaxing traditional spending controls that have underpinned one of Europe’s sturdiest budgets.
Just five years after austerity exacerbated a record-long recession, Alena Schillerova — the first female finance minister in the nation of 10.6 million people — is allocating more to everything from retirement benefits and public-sector wages to long-overdue infrastructure projects.
“Our top priority for next year is to improve the situation of senior citizens,” Schillerova, 54, said in an interview. “When else should we increase pensions than at a time of prosperity?
I think we’re doing well and society should share the benefits of economic growth with those in need.”
As Italy clashes with the European Union over its deficit, the Czechs are enjoying a windfall that may tip this year’s budget into surplus. Speaking in her office in Prague, Schillerova rejected criticism the government’s policies are aimed at boosting its popularity and brushed aside warnings of fiscal risks stemming from a downturn.
With the EU’s lowest unemployment and the fastest real-wage growth in 15 years, state coffers are benefiting from lower spending on benefits and higher tax collection.
The Czech Republic boasts one of Europe’s lowest debt ratios, and strong fiscal performance contributed to Allianz SE ranking the ex-com- munist nation the EU’s most stable economy for 2017.
The central state budget, a narrower measure that excludes items including municipalities, will probably be balanced or in “a very slight surplus” this year, instead of the planned 50 billion-koruna ($2.2 billion) deficit, according to Schillerova. She says the 40 billion-koruna shortfalls her ministry forecasts for 2019-2021 may be smaller.