SAO Annual Report 2023: Czech Republic Not Sufficiently Prepared for Crises

PRESS RELEASE ON ANNUAL REPORT 2023 – 2 April 2024


Amidst the deteriorating security situation in the world, the Czech Republic is not sufficiently prepared for crises and emergencies. The system for the protection of soft targets remains incomplete and the long-neglected state of civil protection continues to be a source of vulnerability. Permanent shelters are falling in number and can accommodate only 3.2% of the country’s population, while hazmat suits and other personal protective equipment are in short supply. The Ministry of Defence has failed to make efficient use of its funds to modernise the military vehicle fleet and equip the chemical corps. The modernisation of the state administration remains limited and the level of digitisation low. There has not been any significant drop in government borrowing, the economy is not growing, and high inflation has lowered real household income. This is a brief list of the results of 33 completed audits and opinions on the state management, which the Supreme Audit Office (SAO) summarised in the Annual Report 2023 that it has just published.

“The SAO Annual Report 2023 offers a comprehensive view of how the Czech Republic is doing, describing system bottlenecks and the country’s concerns and wants. The results of our audits show that the response by state institutions to crises and emergencies has often been merely formal. Real changes that would enhance the country’s preparedness for crisis situations have been very few and far between,” says Miloslav Kala, SAO President, commenting on the results published in the Annual Report 2023.

The audit of the civil protection system (Audit No 22/12), on which over CZK 720 million was spent during the period that was audited, revealed that the Ministry of the Interior failed to bring numerous tasks to completion. Specifically, the Ministry did not provide sufficient personal protective equipment such as masks or hazmat suits and failed to launch a website instructing citizens how to behave in a crisis situation. A poll conducted by the SAO confirmed the lack of people’s awareness in this regard. Approximately 80% of the nearly 47 thousand respondents did not know where to find a permanent shelter, while almost half did not know what to do in the event of a chemical spill. The SAO audit also pointed to a steady decline in the capacity of permanent shelters, which is currently sufficient for only 3.2% of the population.

Last year’s audits by the SAO also focused on the Czech Republic’s defence capabilities. The auditors found, among other things, that the Ministry of Defence (MoD) had failed, despite having billions of crowns added to its budget, to ensure the planned modernisation of the Czech Army’s vehicle fleet, which thus remains seriously outdated (Audit No 22/11). The MoD was spending inefficiently and ineffectively on repairing outdated equipment. The MoD even approved repairs that were more expensive than new cars. The MoD also failed to improve some of the capabilities of the Czech Armed Forces’ chemical corps (Audit No 23/03). The MoD did not purchase special chemical automobiles, decontamination agents or chemical suits. As for the light armoured vehicles that were purchased, the MoD did not justify the change in their quantity and capabilities, as a result of which the price increased by nearly CZK 4.5 billion, i.e., 522%.

The efforts to modernise public administration, especially through digitisation, have had limited effects. While the growing range of paperwork a citizen can handle digitally deserves some praise, authorities and state institutions continue to process submissions in obsolete ways, or the adoption of IT equipment does not alleviate the administrative burden within the institution. As a result, the state administration is not experiencing any major modernisation, and nor are there any significant cost savings. Examples include the administrative complexity of paying the compensation bonus to the self-employed who were restricted or prohibited from doing business during the COVID-19 pandemic (Audit No 22/07) as bonus administrators had to transfer data manually from online applications to their information system. This bonus cost CZK 457 million to administer. With the extent of data sharing still low, citizens are required to repeatedly submit identical data to the state. The international digitisation index (DESI), too, shows that most EU member states have a higher level of e-government than the Czech Republic.

The SAO continued auditing subsidies last year. The audit results show that the subsidy system has not changed significantly despite some efforts. The system remains difficult to administer and navigate, and beyond control. While focusing excessively on formal conditions, the system fails to pay attention to the real objectives and benefits of subsidies, i.e., the delivery of public service through the funds. Subsidies are often allocated to projects with no real impact on society. It is essential to fundamentally rethink the complex structure, make more use of the subsidy limits, and encourage the beneficiaries to behave economically.

As for the state of public finances, the Czech Republic failed to reduce the pace of debt accumulation in 2023 effectively despite higher tax revenues. The debt rose by CZK 216 billion year-on-year, amounting to over CZK 3.1 trillion at year end. This also entails high debt-servicing costs, which have grown by nearly CZK 29 billion since 2019 to a total of CZK 68.3 billion. The growing state debt places an additional burden on future generations. The second highest inflation in the EU has eroded real household incomes. The Czech Republic’s GDP decreased by 0.5% year-on-year, as opposed to a year-on-year GDP increase of 0.5% in the EU.

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