Czech government meets to approve state budget draft with 386 billion CZK deficit

Cabinet moves to approve budget draft

The Czech government convenes on Monday to formally approve the draft state budget for next year before submitting the proposal to the Chamber of Deputies. Finance Minister Alena Schillerová scheduled a press conference following the cabinet session to present the full parameters of the financial plan. Prime Minister Andrej Babiš confirmed that the coalition will approve the measure following negotiations among ANO, Motoristé, and SPD. The baseline draft prepared by the Ministry of Finance calculates a 3.3% increase in total revenues to 2.189 trillion CZK and a 6.2% rise in spending to 2.578 trillion CZK. Most government ministries are slated to receive increased spending allocations under the draft. The resulting fiscal deficit ranks as the second highest in the history of the Czech Republic, exceeding the 310 billion CZK deficit budgeted for the current year.

Coalition negotiations and fiscal targets

Coalition partners Motoristé and SPD demanded spending cuts over the preceding two weeks to reduce the proposed 389 billion CZK deficit. During negotiations on Thursday, coalition leaders reached an agreement to cut roughly 3 billion CZK immediately from the headline deficit figure. The government also plans to introduce legislative amendments during the autumn to generate an additional 20 billion CZK in spending reductions during next year. Motoristé party leader and Foreign Minister Petr Macinka confirmed that his party will vote for the budget following consultations with Babiš prior to departing for the United Nations General Assembly in the United States. The National Budget Council and parliamentary opposition criticized the widening deficit, pointing out that the country faces no emergency conditions and that the borrowing covers ordinary operating expenses. Babiš defended the plan by stating that the Czech Republic remains one of the least indebted countries in Europe.

Motoristé criticize inclusion, they want less money, I will try to convince them that education is one of our priorities.

Education spending and fuel price intervention

The education budget proved to be the primary friction point during bilateral coalition talks between Babiš and Macinka. Education represents the second largest spending chapter in the national budget, totaling 287.9 billion CZK, which reflects a 1.3% increase of 15 billion CZK compared to this year. Babiš defended this spending by outlining funding needs for municipal school expansions, higher allocations for private and church schools, and 300 million CZK to provide teachers with dedicated prevention time. Alongside the budget debate, the cabinet plans to evaluate emergency interventions against surging fuel prices. Diesel and petrol prices increased rapidly in recent weeks due to escalating conflict in the Middle East and refinery capacity constraints. Deputy Prime Minister Karel Havlíček announced that the government prepared responsive measures for cabinet review after neighboring countries initiated similar fuel policies.

Broader government agenda

The cabinet agenda includes multiple specialized financial plans, statutory amendments, and strategic policy documents. Ministers will approve budgets for the State Fund for Transport Infrastructure, the State Fund for Investment Support, and funds for research, development, innovation, and knowledge transfer. The government will also announce the parameters for statutory pension growth and determine state payments for state-insured individuals. Other items scheduled for review include an amendment to the Sports Support Act to expand the powers of the Czech Anti-Doping Committee, an environmental decontamination plan for Šumava National Park, and the national climate change adaptation plan running to 2030. The cabinet will also review a report on low-carbon hydrogen technologies, an interior ministry audit of criminal wiretaps and telecommunications surveillance from the past year, and a bilateral cooperation framework with Italy through 2030.