Babiš compares himself to Charles IV again — but the facts say otherwise

Czech Prime Minister Andrej Babiš has once again compared himself to King Charles IV while brushing off criticism over unresolved problems — in May it was the environmental situation in the Ostrava region, and this past weekend it was his promised but never-launched crackdown on kratom products. The comparison rings ironic, given that his government is simultaneously accusing regions and municipalities of excessive thrift, framing their savings as a sign of inefficiency.

The dispute over four billion crowns for roads

Tensions flared over the traditional subsidy of four billion crowns that regional governors had expected from the state budget for road repairs. According to the prime minister, regions already have plenty of money and are simply "sitting on it for no reason." This isn't an isolated remark — it's part of ANO's pre-election strategy ahead of the municipal elections, in which local budget surpluses are portrayed as a vice and spending as a virtue.

Official figures show that regional and municipal accounts held 625 billion crowns in reserves as of mid-year. The sum sounds astronomical, but experts point out it amounts to only a quarter to half a year's worth of expenditures — a standard financial-planning benchmark, whether for a household budget or a regional one.

What's really behind the criticism of the regions

The attack on local authorities' frugality coincided with another development: this week the Chamber of Deputies finally lifted limits on state borrowing. According to the National Budget Council, Czech municipalities had the largest budget surpluses among all EU countries back in 2023 — both for that single year and on average over the preceding 12 years. But last year the figure nearly dropped to zero, staying slightly positive only thanks to Prague.

The reason for these reserves is rising investment — something the finance ministry itself used to praise. Prague, for instance, is saving up for major projects: the latest estimates put the cost of building metro line D at 100 billion crowns, on top of the city's ring road. Prague is also too wealthy to qualify for EU subsidies, so it has no choice but to set aside its own funds.

Roman Kalabiška, a municipal finance specialist at the National Budget Council, notes that building up reserves also makes sense given how subsidy programs work: without its own funds, a municipality won't receive financing, and typically it must cover the entire project cost upfront before waiting for reimbursement. "Keeping more than half a trillion crowns in accounts may not be optimal, but from the municipalities' point of view, it's rational behavior," the expert explains.

Why the Charles IV comparison doesn't hold up

Unlike the state, municipalities can't simply borrow at will — when the state runs a deficit, it just issues new bonds, passing the problem on to future generations. The era of cheap money is over: even the state now borrows at nearly five percent, and the rate for lower levels of government would be even higher. Four billion crowns for roads may look trivial against hundreds of billions in reserves, but most local budget money goes toward legally mandated expenses like schools and social services, leaving only a small share for genuinely local policy decisions.

Economists also point out that handing out hundreds of billions in state contracts won't automatically boost prosperity: the construction sector is already working at full capacity, while private developers are scaling back projects due to overheated prices for materials and labor. An additional flood of orders right now is more likely to fuel inflation than widespread prosperity. As for Charles IV himself, historians note that before launching his "golden age," he first had to pay off his father's debts and buy back the pawned royal estates — rather than build his success on credit.

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Source: seznamzpravy.cz