Czech Budget Deficit for Next Year Will Exceed the Limit Without Controversial Law

Czech Finance Minister Alena Schillerová has summed up the results of negotiations with heads of government departments on next year's state budget, announcing that the deficit will grow and spending by several ministries will increase compared to the original draft presented in June.

According to her, talks with the ministers went constructively, although not all requests could be met. “I couldn't fulfil every demand, and some colleagues were certainly left unsatisfied. That's only logical — requests are always very high,” Schillerová noted.

Defence to receive a record two percent of GDP

Next year the Ministry of Defence will have a budget of 191 billion crowns at its disposal. This will allow the Czech Republic, for the first time in its history, to meet its commitment to spend two percent of GDP on defence, the finance minister emphasised.

Interior Minister Vít Rakušan... — wait, actually Lubomír Metnar (ANO) said his ministry's budget for next year will be higher than the current one, though he did not give an exact figure. This year the Interior Ministry received 114.8 billion crowns for expenses, not counting EU subsidies. The Education Ministry's budget will grow to nearly 300 billion crowns.

The exact figure for the Ministry of Labour and Social Affairs has not yet been determined — it will depend on whether the government decides to raise pensions beyond the limits set by law. Public sector wages are also expected to rise: tariff rates should increase at least to the level of the minimum wage and guaranteed salaries.

Without the controversial law, the deficit would be half as large

Schillerová confirmed the expected growth in the budget deficit, driven in part by a law that loosens the rules on fiscal responsibility. President Petr Pavel vetoed this law, but according to the minister, the ruling coalition intends to override the veto.

“Without this law, the maximum deficit would have been 150 billion crowns,” Schillerová said, adding that in that case it would have been impossible to draw up a budget at all.

This year's planned deficit of 310 billion crowns is set to be the fourth-largest in Czech history. The largest deficit the country recorded was in 2021, at 419.7 billion crowns. Before the COVID-19 pandemic, the Czech Republic ran budgets with substantially smaller deficits: before 2020, the hundred-billion-crown threshold was exceeded only five times.

Around Prague, based on reporting by novinky.cz