Czechia is borrowing a billion crowns a day — and this is just the beginning

Next week, the Czech government will present its draft 2026 budget with a deficit ranging from 310 to 400 billion crowns — roughly 100 billion more than this year. According to analysts' calculations, this means the state will be borrowing about a billion crowns every single day, or 100 crowns for every resident of the country, babies included.

For a family of five, that works out to 500 crowns a day — enough to afford more generous meals or extend a vacation by 36,000 crowns a year. But instead of boosting people's incomes, this money is turning into public debt that future generations will have to pay off.

Budget rules loosened in advance

The ruling coalition has already permanently scrapped the strict numerical debt caps once enshrined in the fiscal rules law. This amendment allows the government to present a budget with a record deficit as early as Monday, without any formal restrictions standing in the way.

This course has drawn criticism from the president, the opposition, the National Budget Council, the European Commission, the International Monetary Fund, and, just days ago, a group of two dozen Czech economists. In their view, this represents an unhealthy path for public finances.

Even the three-percent-of-GDP target is being missed

According to the Finance Ministry's August forecast, Czech GDP next year will reach 9,531 billion crowns. Three percent of that figure is 286 billion crowns — noticeably below even the lower end of the announced deficit range of 310–400 billion. Before the elections, the ANO party had promised to cut the deficit by 0.5% of GDP every year; that promise has since vanished without a trace, leaving only a vague commitment in the government program to stay within three percent of GDP — a target that, based on the numbers, won't be met either.

Where is the borrowed money going?

The argument that debt is justified by investment doesn't hold up here: road construction already received a record 161 billion crowns last year, and this year's figure grew by just 8 billion — there's little room left to expand investment further. The first payment for the new Dukovany nuclear power unit has been pushed to next year, while defense investment has actually been cut this year. The freed-up funds went instead toward discounts on electricity, fuel, and insurance contributions for entrepreneurs — that is, toward current consumption rather than development.

By comparison, Petr Fiala's government, whatever its shortcomings, managed to bring the deficit down from 5.6% to 2.1% of GDP. The current cabinet justifies its growing borrowing as necessary to preserve "social peace" — arguing that without debt, the budget would supposedly be "simply impossible to put together."

Debt has nearly tripled since the pandemic

Since the start of the COVID-19 pandemic, Czechia's total public debt has grown from 1.6 to 4 trillion crowns. Servicing this debt costs more than 100 billion crowns in interest every year — a sum that could, for instance, buy new cars for every teacher in the country. Yet the government program includes even more costly measures still to come: a VAT cut on soft drinks, state-funded television, new mortgage subsidies, higher starting salaries, the reversal of pension reform, and a buyout of shares in the energy company ČEZ — all of it to be financed through fresh loans that will fall on the shoulders of future generations.

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Source: seznamzpravy.cz