Andrej Babis, the Czech Republic’s new finance minister.
Courtesy of ANO
The Czech Republic’s new finance minister, in office not quite two months, has begun prodding his underlings to put idle state funds to work in the local money market.
At issue are funds which may be needed later in the year but for now are only gathering dust.
Andrej Babis, the finance minister, said he urged his asset managers to put the money to work in more advantageous short-term instruments at local, commercial banks, including units of France’s Societe Generale SA, Belgium’s KBC Group NV or Austria’s Erste Group Bank AG.
“The state doesn’t have online banking [for such funds] and there are several tens of billions of koruna just sitting there” on the state’s account at the central bank, he said.
Before the move, which took place at the start of this month, the state had some 47 billion koruna ($2.38 billion) worth of euros parked at the central bank earning a paltry 0.04% in interest, while now it has only CZK3 billion of euros there, Mr. Babis said.
The funds on the money market are now earning between 0.27% and 0.35% per annum, he said.
“From this euro placement we’ll get up to 35 million koruna in returns this year. It seems small, but every little bit helps,” he said.
The three-party, center-left coalition government last year’s election campaign pledged to generate new revenue without raising taxes to enable the elimination of hospital fees, to boost funds for education or ramp up infrastructure construction.
Previous governments had used the money market but more conservatively and in much smaller quantities, a finance ministry deputy said, usually leaving the majority of euro-denominated funds parked at the central bank.
The onus is now on Mr. Babis and his peers to eliminate wasteful spending and initial money market transactions need to be closed profitably before the government can declare any revenue-generating victories.
Mr. Babis, who has assembled a new audit team at the ministry which is scrapping tenders and purchase orders it deemed dubious, earlier said more critical approval of expenditure and better use of state funds ought to generate revenue so the government won’t need to impose Hungarian-style sector taxes on banks, telecommunication companies and utilities to finance increased spending.
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