Czech government approves 2027 draft budget widening deficit
The three-party Czech government approved a 2027 draft budget to widen the deficit for a third straight year, citing Prime Minister Andrej Babis’ pledges to raise spending on public wages, road investments, healthcare and defence.
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(Adds details, more context, paragraphs 4 to 12) Deficit target to rise to CZK 386 bln Fiscal gap testing EU's 3%/GDP ceiling Government has promised more money for health, investments Defence spending to rise, critics say not enough PRAGUE, Sept 21 (Reuters) — The Czech government approved a 2027 draft budget on Monday set to widen the deficit for a third straight year to keep up with populist Prime Minister Andrej Babis' pledges to raise spending on public wages, road investments, healthcare and defence. 21 billion), Finance Minister Alena Schillerova said. That is up from 310 billion crowns expected this year and 291 billion crowns in 2025.
The Czech Republic has maintained lower deficits than its peers in central and eastern Europe, keeping below the European Union-mandated ceiling of 3% of gross domestic product, a level which Babis' cabinet also pledged to keep in its programme manifesto. Testing Deficit Limits But it is now set to exceed that deficit limit as spending rises, in line with Babis' election promises. 7% in 2026. Critics, including the budget watchdog, say the spending drive is increasing debt at a time when borrowing costs are already rising.
The deficit had fallen to around 2% of GDP in 2024 and 2025 under the previous centre-right administration. But Babis says more spending is needed to fund road and rail projects, to shore up the healthcare system and boost public sector wages. Defence Spending Rise Still Faces Criticism Babis has also come under fire over defence spending, which is set to rise to 2% of GDP next year, meeting Prague's minimal NATO commitments. But the government has refused to accelerate defence spending further, even as other member states have done so due to concerns over Russia.
S. envoy to NATO have criticised the government's approach. 0% by 2035 and some allies, including neighbouring Poland, have already boosted spending significantly above the current 2% level. S.
ambassador to NATO, Matthew Whitaker, said it was "disappointing" to see the Czechs' lack of progress towards meeting new commitments. com;)