Experts warn Czech president Pavel of 2027 budget crisis

Czech President Petr Pavel held a meeting with leading public finance experts to discuss the current state of the Czech budget, the draft state budget for 2027, and possible future measures to consolidate the country's finances. The specialists concluded that the state's public finances are moving in an unsustainable direction and urged the authorities to reverse the negative trend as soon as possible.

Spending is growing faster than revenue

According to the president's office, the experts noted that amid economic growth and rising debt-servicing costs, the government is pursuing a large-scale fiscal expansion, meaning that spending is increasingly not covered by revenue. Participants in the meeting also pointed out that there has been less and less open public and political debate over the main budget parameters in spring and summer, calling this harmful for the country.

Economists Vladimír Bezděk, Tomáš Holub, Mojmír Hampl and Jana Matesová took part in the meeting, along with sociologist Daniel Prokop. Despite the high proposed deficit, the president noted that the planned budget had been drawn up relatively transparently — a view the experts disagreed with, pointing to the weakening of public and political debate around the budget process.

Deficit could become the second-largest in Czech history

The draft state budget for 2027 envisages a deficit of 386 billion crowns — which could become the second-largest figure since the founding of modern Czechia. The deficit approved for the current year is 310 billion crowns. Earlier, at the end of August, the finance ministry had proposed a deficit of 389 billion crowns, but during discussions within the government, expected revenue was increased by 9 billion crowns and expected spending by 6 billion crowns.

The experts also proposed possible steps toward budget consolidation that will be needed to fulfil the new government's Fiscal-Structural Plan for Czechia. According to the National Budget Council, the document envisages reducing the general government deficit to 2% of GDP by 2028, which at current prices amounts to 130–140 billion crowns.

Source: novinky.cz