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December 22, 2016
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August 7, 1953
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Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 CLASSIFICATION RESTRICTED -." CENTRALENTELLIGENCE~gGENCY INFORMATION FROM FOREIGN DOCUMENTS OR RADIO BROADCASTS COUNTRY Cze^.hos?lovatia SUBJECT Economic -Financial, budget HOW PUBLISHED Daily newspaper WHERE PUBLISHED Prague PUBLISHED 22 - 24 Apr 1953 o,~,.,~~.~?e , ,~~.~~?N ,...~.~.,~ .. ....... . .... REPORT CD N0. DATE OF DATE DIST. 7 ~-[1953 N0. OF PAGES 11 SUPPLEMENT TO REPORT N0. THIS IS UNEVALUATED INFORMATION C~ECH~I_+'t^1IOi:AL BUD,;ET FCR 1153 Comment: Tire following report is taken from an address de- livered to the Czechoslovak hutioasl P;ssecably on 21 April 1953 by Jaroslav Kabes, Minister of Finance, reco:rr.;endin~ that the assesably approve the proposed budget for 19'3; and from comments by other members of the I7ational As,embly. It m;ty be pointed out that this report t;ivcs ouch more detailed information and many more absolute Figures than were avtiLable on the 1952 budget. As part of the discussion of file 1;+53 budget, t':c Assemble was also given i'inal budget figure; o:' t:-~ 6;iuistries oi' uchools. Health and Physical 3ducutior, end Soci'11 }:cl:'aro fo, 1951_7 ffi1BE;, PROPC~ES BJDGET 'I'0 THE II:;TIOiLiL :r;SSbBLY -- Pry ua, 3ude F'ravo, dd .,pr >3 Juronlav iCabes, Minister o.' Fin-:nc,?, yesterday presented to r},F Czecitoslo- vt~.l, i!ational dssembly, for approval, the l~-.,? bud_eL? fie stated that the figure, presented pre based on the results oi' `.he ;tote ecot+cr;y in 1'a5~, a,. we 11 as on the planned inpreases i'or 1953?rl~.n,ted total national income will be l~35 billion crowns which, compared ?.aitn 1;52, shows a:; increase o^ 32.5 Percent. Planned expenditures for 1953, =c.orlin:- to his rroposal. toC.:1 h30.9 biLliou crowns, showing au ircreasc ?l over l ~, oi' :~ percent.. iir-ccss expenditures will total h,3 bil.lin:, ~?t?o?,r:s, of i+'cuc;e over 0:' the tar e iucrcase oce:? ;5~ the aaount of 75,p billion cro~,;:; a , tore. is only an apnnreut incre P.arenr, in both incor,+~~ and ace, si;:ce i!;is year Cor th_ first ti+ae the budget includes social security ?eceipts and expenditures; also, :.11 fi;;ur~G used .?eilect- the full wnount of oath income and ~~;penditure o: or :. of th budget- ary organizations and not ju^,t the dif:Cerence bet?,reen income at e:q,anciiture, as uas been the custom heretoforc? Ouly fire remaiu?der of the lncrease c~er 1952 of some 31.1 billion Browns, therefore, economy, ra;resents actual ;;rowth o!' the CLASSIFICgT~ON FII.;T:iIL'SD :'4TRIBUTION ! L STAT STAT ~~ ~~ Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 Knbes stated that the largest single component of income is the turnover tax in the amount of 29z.3 billion crowns, which is o7.1 percent o!' the tctal national income. The second important source of nationnl income is the ac- tual profit of nationnl enterprises. Roughly two thirds of the profits of all national enterprises will be turned over to tkte national treasury. The remaining one third will be retained by the enterprises to be used for planned investments ~uildings, machinery, and other asset_]; for an increase in op- erating funds; for apportionments to management funds; and for other purposes. By close supervision of the remittance of profits by each enterprise to the national treasury, pressure is exerted by the management for the estab- lishment of true cost nccountittg, for reduction of production costs in the enterprises, and for increased efficiency. It cannot be said that all of the productive ministries have expressed, through this method, their understanding of the problems, tasks, and needs of the state. ;.ccumulation (akumulacc) is good evidence, and perhaps the main one, of good management in ttte enterprise. The results shown by the Czechoslovak state farms in 1952 were unsatis- factory, and hence burdene3 the state budget with planned as well as unplanned losses. The state farms in 1952 did not fulfill the production plan; failed to observe fully the agrotechnical time schedules, planned per-hectare yields, and planned productivity of animals; did not secure the planned amount of i'od- der and feed stocks; and failed to operate with Lru1y economical efficiency. They have been instructed to reduce their cost oi' production expenditures by some 13 percent in 1953? Some enterprises of the tdinistry of Metallurgy and Ore }di^.es have failed to fulfill their plans because of an inordinate amount of idle time caused by delays in deliveries oi' new productive means. Some enterprises of the idinis- try of Fuel and Power have shown a high percentage of interrupted production caused by lack of deliveries of production machinery. iCnbes continued as fol- lows: "Rejects and defective materials are the scourge of our industry. It will be imperative to insist that losses caused by such defective production be charged to the plant or enterprise u'nlch caused them; and ir. the audit and supervision of the enterprises it shall be noted Sf such Losses have been charged back to the plants r3uilty o!' poor work." The second reason for failure to fulfill planned accumulation is the lssek of r-+preciation of financial raana~ement. The national plan :and the national budget are dependent on the total of all ~.conomic activity. Renee it is es- sential and unavoidable that we create supervisory or,;an; and finuncittl de- partments in all the brunches of the state udministrat,ion and in the main ad- ministrative bodies; it is imperative that the directors o!' all orpaoizations depend more than they have in the pst, on their o'.+r. 'in:.ncial sad accounting workers to act as duardiacs of financial discipline. It is not possible to permit or condone disordarLy accounting, laxity in meeting accounting deadlines, or delay in the preparation of statistical re- ports. According to orders issued to the Ministries ort 10 February 1)53, all enterprises must make monthly reports of the fulfillment. of *.he nl;ut and simul- taneously must make provisions for fire removal of all deficiencies as well as for the reduction of excel. expenditures. The taxes paid by the individual citizens will amount to 1i.3 percent, o!' the total national income sad will total almost 3G billion crowns, wttlctt sum includes the amounts formerly contributed by the employees to t.ite social se- curity fund. STAT ~~ Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481_3_ Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 Just as the workers pay nn income tax, so the farmers, too, must pay their agricultural tax, and steps must be taken to prevent a recurrence of the old lax method of tax collections, which resulted in many tax delinquencies. The National Committees as well as the farmers must solve this problem. Expenditures According to Kabee, the state expenditure for 1953 as projected in the budget totals 430.9 billion crowns, and is to be apportioned as follows: Department Billion Crowns Percent of Total National Economy 254.5 59.1 Culture and Social Welfare 111.1 25.8 Defense and National Security 41.8 9.7 Administration 18.8 4.3 National Debt 4.7 1.1 Total 430.9 loo.o The largest single item listed above is the sum set aside for the national economy and Its development; of this sum almost 60 billion crowns will be al- located for investments. In addition, the enterprises will expend about 37 billion crowns of their own funds for this purpose. In 1952, investments increased substantially over the year 1951, and in 1953 it is planned to continue this expansion. In order to accomplish this, the government has instructed its ministries to reduce the amounts needed for construction work by some 20 percent; not by slowing down construction work, but by eliminating superfluities in the projects, and by deleting an3 sim- plifying the finishing processes in the buildings as well as in the production of construction materials used. To secure a speedy completion of such invest- ment works, it is necessary to center activities on the most important objec- tives: on the purchase sad procurement of those objects moat urgently needed by industry, on the repair of those now in wee, and on completion of construction work now in process. There are several things hindering the investment program. One of them is the inefficient or negligent use of all industrial plants. Another is the incomplete preparation of plans for a projected building or plant. The Invest- ment Bank will not, and cannot, authorize funds for the construction of ob- ,jectives where complete and detailed plans and budgets have not been prepared. The operating funds of the individual enterprises for 1953 have been in- creased over 1952 by more than 12 billion crowns, of which the national budget provides some 4.6 billion crowns and the balance is provided by the enterprises themselves. This increase in operating funds of the enterprises is depec:dert on sev- eral factors. Speedup of turnover is one of the major problems of industry. Any such program presupposes reduction of work in process, reduction of deliv- ery time, increased deliveries of raw materials, strict scheduling of raw ma- terisls, and a stringent discipline as to the fulfillment of plans. In the national budget, the speedup of sales means quicker turnover in current funds and more speedy release of such funds for other uses. f STAT s?id~ I?1~ Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 This increnae in the ratio of turnover is especially important as far as the ministries oP Heavy Industry and of Internal Trade are concerned. These two ministries have a great deal of investment funds lying idle in tYreir vast inventories. In 1952, these stocks were not reduced; on the contrary, they have been increased. This was caused partly by the failure to fulfill the production plan, the investment plan, and the plan for retail sales. Agricultural expansion is one of the main tasks in the socialist state, hence the government has set aside 3.5 billion crowns for the improvement of plant culture and animal husbandry. This amount does not include the sums allocated to agricultural research. There are billions set aside by the state for the expansion, maintenance, and repair of machinery in the MTS. The JZD (Unified Agricultural C,.~peratives) also receive state assistance in the form of credit and reduction in rates charged by other government agencies ~or goods and service. Credit available to the JZD has been increased 50 per- cent over 1952; hence it means also increased respcnsibillty for the proper use of such funds. This Important role falls to the Czechoslovak State Bank and the Investment Bank. The strength of the JZD rests in their own inner organization and not in subsidiary grants made by the state. For this reason, the government has made strict rules regarding the credit to be extended to the individual JZD, since only through well organized credit will it be able to maintain its af- fairs in good order. The general repairs plan for 1953 almost trebles the money allocated for the same purpose in 1952? General repairs, if done properly ao3 in time, will prevent heavy expenditure for replacements and will prevent unnecessary stop- pages and delays. The second largest item of the state budget Ss the fund set aside for culture and social welfare. It is apportioned as follows: Item Billion Crowns Per Cnpita in crowns Education and Enlightenment 33.9 2,692 Social Security 52.4 4,159 Health and Preventive Medicine 24.8 1,961 Total 111.1 8,812 The fund for hospital and maternity beds is increased 6.5 percent over 1952, and for creches, 9.4 percent. The number of children cared for in kin- dergartens is to be increased 10.4 percent; the number of pupils in national and middle schools, 5.6 percent; and the number of students attending insti- tutions of higher learning, 11.3 percent. Because norms for expenditure in the culture, social welfare, and health programs have not yet been established on a scientific basis, it is imperative that all sums appropriated for these purposes be utilized to the very best advantage; undoubtedly it is possible to obtain more value for the sums expended. The government has set aside one billion crow^s for scientific research. 1952 will remain a banner year in Czechoslovak socialist history, inasmuch as the Czechoslovak Academy of Sciences, tl~a Slovak Academy of Sciences, and the Czechoslovak Academy of Agricultural Sciences came into be ins during tlas year. STAT Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 Det'ensc and Ilntional Security The allocations made for the purpose of defense and ;:atio::ul security amount to 9.7 percent of the total -+ational budget. This is comparatively a large sum, but it would be a serio~ error on our part not to face reality and not to be prepared to defend the cause of peace, in case of aggression. or attack. Administrative Expense The administrative organs of the 3overrm:ent require art e:cper,diture of 18.8 billion crowns. although ir. rscent years a determined effort has been made to reduce the amount of money erpended for administrative purposes, all the possibilities for savings in state administration, suet: as simplification of work and better organization, have by no means been exhausted. The establishment of wage funds in 1952 has done a great deal to sta- b111ze work discipline, and has also led to the creation of pr_determined bases for a better arrangement of the plan o; :cork fur 1953- The broad indexes of the plan of work must necessarily be supplemented by detailed plans to conform with the goals andjor tas}?s of each separate or- ganization. For this reason, the government, in its approval of the state economic development plan for 195;, ins?sted that the systemisation of all the administrative offices should continue to be the major task. This systemization should also set a new tas}; for t::e finatcial organs. They must compile n register of all approved ad,ninistrntive workers, with de- ta11s on their status and personal oualifications. They must also render re- ports regarding :rages, including the monthly average wage and the status of wage funds; and the amount of administrative as we 11 as operational overhead. The budgets of the national Committees are now completely independent; the committees may no longer dip into the atnte fuc:ds, re;~ardless of the amount of their own income they may have at their disposal. On the contrary, they must hold down their own expenses to conform with t}:e income they ob- tain from their own sources and the planned allotments from, s*.ate taxes. This fact in itself will be an inducement to them to sea tt:at the state income plan is fulfilled. This year, for the first time, udmir, of the ilnr.ionsl Co:mnltt:ces till include local enterprises, both i?ulustrial ami cut:e:,u: al, t},eir ulioca- tions and remittances, so that t:,eir econo::ac result.; will be reflected ir. the status of the National Comrtittec;;. The national budget acts the total exne:,ditur~::; of t:;c ~ at.lot:al Commit- tees at 70.1 billion crowns; their o:n; incase is u6 1.5.1 billion crowns and the difference, 55 billies c:?owns, h:_:; bee:: fmm t}?e state tax revenue. The Rational Cotamittees urc the basic or,;anisation in ..::eel:oalove:k so- ciety. Their activity brings titer into direct ,ortaet. w;.th o,illiors of citi- zens and with the problems of their daily Life. 'he 1nr,;::::C :lc:ount of t're co:-.ctittees' expenditure^, 6.z n.:raent, is devot'._?d to cu'_tur.L and social wel- fare expenses. The [Iutioual Commnittees are directly r~a,oaaibL: ^or the pro- vision oi' such services as repair and muiut;enance shops. 'Pne remittuucea oY ronmunal enterprises, which were fort:!erly sent t:o the I.linist:?y o: tar Inte- rior, are uorr the main source of income for the iational Cost:;:ittees. STAT !~ ~ Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 The nntionnl 'budr;et is the synopsis of the tasks and goals set I'or the current year of the Flve-Year PLan. The year 1952 has been successful in the following sectors: industrial production exceeded that of 1951 'oy 18.3 per- cent and hence almost doubled that of 1937; the socialization of small busi- ness is almost 99 percent complete, whereas as late as 1948, 86 percent of the retail (small) business was controlled by private enterprise. Concomi- tant]3?with iigher industrial production and increased agricultural production, consumption has increased. In 1952, the consumption of meat has risen 2 per- cent over that of 1951, and 27.5 percent compared witr. 1936. In 1952, the consumption of lard exceeded that of 1951 by 9 percent; bread, 10 percent; baked goods, 23 percent; synthetic edible lots, 3 percent; frozen vegetabl~ys, 17 percent; and cigarettes, 10 percent. The higher living standard has been nchieved not only by greater prodrtc- tivity, but also by the exchange of optional products for those of other na- tions, particularly those of Lhe people's democracies. STATEt~ir^.ii'f Oh' T1~ 1953 BUDGET BY JOZEF VAhC, VICE-FitE3IDEi~' Oz' TIr=. P.ATIOivAL ASSEhffiLY -- Prague, Rude Fravo, 22 Apr 53 The national budget for 1953, gust pr.rented to tiro Assembly, lists a total expected income of 435,207,287,000 crowns, and expenditures of 436,910,210,000 crorms, leaving a surplus o_ $,2y7,071,000 croups. The expendi- tures include 70 billion crowns for r.ew im?estments. This is ir. addition to the billions already earmarked for tre replacement, mairtenanc=, and repair of factory buildings, machinery and er.tip:aera. The 1953 budget allocates 23 .;; billion. cro?.ruu for education, w;rich >_ 24 times the amount spent *_'or liar purpo.:e i:: 1937; 21x,5 billion crown:, for health and social welfare, which is 27 times fire a:count sr:ent in ly3'J; and 53,975,000,000 crowns for unemployment, sick benefits and family allotments, xhich is 13 times the amount spent in 1937? The National Coc;raittees preparel tl:e carious segments of tti:: budget in 23 all-day sessions. `. great deal of attention was given r,o the development of the basic industry and the development of natural resources. Czechoclo- vaki.. has a Brest many unexploited deposits and undevelcped areas which must be utilized. The Idinistry of Fuel and Power was criticised by the iiatioral Committees for slow mechanization of the mines. Even though tare USSR ha^, furnished mod- ern machinery, the mining industry has not yet learned to make effective use of it. It is of the utmost importance that ;:'re 1?tinistry or' heavy Machine Bui1d- Sng fulfill the plans set for it, since it rot only furnishes ;aschinery for the use of Czechoslovak industry, out for the people's democracies an3 the USSR as well. Every delayed shipment is a hindrance to the ;;rent work o: building socialism. lv,S17?D3LY DISCUSSEr', TIffi 1953 BUDCLf -- Pra,-ue, Rudc Pravo, ~~ :iur 5; Deputies of the ational l~ssembly continued their cliscussior. o' Lire 1953 budget with I?Ime :1ne;:kn Rodinova-Snurna, vice-president, presidi,:;. bhne B. htauh:rr_ova-Dostalovu co :pared the Czechosloval: oudgat r;ith the budgets of the cnnitalistic countrie?-. :`.mong otiret' comp:erison~, sl;e stated that the US allocates ~; percent of its er.t.ira oud;;et :or direct ~ailitary purposes. STAT ~ Sanitized_Copy Approvee?d for Release 2011/09/14 :CIA=RDP80-00809A00070012048 Sanitized Copy Approved for Release 2011/09/14 :CIA-RDP80-00809A000700120481-3 0. Burda, deputy, spoke on the necessity of the budUatis provisions for military defense and national security purposes. E. A. 'Link, vice-president of the national Assembly, said t::at i.n 1)53 the industrial production in Slovakia will be more titan five times that of 1937. In 1952, heavy industry alone reached a level of more than six times that of 1937? The plan for 1953 culls for an increase in coal production by 34 percent, electric power by 36 percent, and iron-ore mining by 23 percent, as compared with 1952. Deputy 'Link also stated that at the end of 1)j2 almost half of the agricultural land in Slovakia was farmed by the socialist sector and there were some okreses, such as idartin, Turcianske Teplice, Samaria, and Calovo, where agriculture had been socialized up to 98 percent. In addressing the assembly, both A. Fiala, another vice-preside:;t of the Assembly, and Dr D. ?olansky, deputy, praised present conditions iu C~.echoslo- vakia. Deputy Holickn in iris discussion brought up the need of securing a suf- ficient supply of ores for t}:e nation. Boti: the industrial potential a:,d greater agricultural production are depe:;de.^.t on the 3e?.elopmer.t of natural resources. The chief hindrances i.. the i'ieLd cf 3?oiogical researc!, are fire lack of technical equipment, o: irs trurter.ts, and of t.raine3 personnel. Dur- ing 1952, planned research excavations were fu1:'i11ed ;in meters) 97 percent. Of this amount, EIEt percent consisted of borings. The situation remsins crit- ical so far as trained personnel is concerned. During 1952, several geolo- gists came from the univ?rslties. On the uholc, these wer? young; men, grad- uates of the School of Mines, ?.+ho were not weighed down ?.:it'.t obsolete prej- udices. Unfortunately they lacked experience, and the :;;eoLogical services of cne mining enterprises need experienced peon lc. Actually decrees regarding improvement in ;colu;ical research not only are not being fulfilled, but, in some instances neither the enterprises them- selves nor the mines are familiar with their provisions. The budgetary group of the Ministry of t?tetallurgical Industry and Or^_ Nines i:as set, as13e sums at Least three times as great as in 19;2 for the des?iopmer.t o^ research, especially geological research of the ruaior,'s nutur.rl resources. Deputy Jan Teper spoke on t}:e great develou..c:;t, :l;:.i c>:~:nsion of the min- ing industry. In 1952, the production o; earl ;u:3 bro?.:n coal itad incro< ,ed 5,223,1+50 tons over the 1951 production. Tep?=r stated, ho?.ever, that the Czechoslovak mining industry has not fully a3opted the So?:let cycle Mork sci:ed- ule. It was planned that in February o^ this year 1tiG cy?les ?.tould be com- pleted, whereas only 111 were actually completed. the Y::rech pLun called for 197, but only l0y were completed. ' Deputy M. Smok, a, engineer, :poke on t!:e ?xtreirc iml:ortance of electri- fication for the socialist progra.,. This year, pc?. er production ui11 be 3~ times the a^rount produced in 1j37. In the period since 1950, Czechoslovak power production iras increased more titan 50 percent. Deputy B. iiozelka stated that at file end of 1)>> the production of pig iron was 37 percent greater than 1:: 1937. T}:e production o:' steel was u2 per- cent over that, of 137, ar.d rolle3 cons u;:?r ;nods exceeded by a