Budget for the Czech Republic is: Most expensive budget since Corona

It was a difficult birth, but an agreement was reached on Monday: after weeks of dispute, the Czech government agreed on the size of the new budget for 2027. A deficit of 386 billion crowns (around 15.9 billion euros) was agreed upon, which, according to the Ministry of Finance, is around 2.8 percent of Czech economic output.

Without the current exemption for defense spending, which also protects Prague from an EU deficit procedure, the value would be even higher, according to experts - up to 3.5 percent of GDP. Healthcare, education and national defense, whose budget exceeds 2 percent of economic output for the first time, should particularly benefit.

Part of this is counter-financed by a levy on the profit margins of oil refineries. It already applies retroactively to 2026 and 2027. For this year alone, the Ministry of Finance expects revenue of around 5.5 billion crowns (around 225 million euros). There are no plans for new taxes for the general population.

The motorists in particular, the smallest of the three government parties, pushed for a reduction in spending. During the course of the negotiations, the deficit was reduced by 3 billion crowns (around 125 million euros). However, skepticism remains noticeable within the coalition. “I don’t see this as the final situation, because the deficit is really very high,” said Foreign Minister and Motorist leader Petr Macinka. The right-wing extremist SPD was also dissatisfied: party leader Tomio Okamura admitted that his austerity suggestions had only been partially met.

Finance Minister Alena Schillerová from the ruling ANO justified the high expenditure by saying that the previous government had left public finances in a dismal state. Without the increase, the Czech Republic would fall into a “trap” of stalled construction projects, poor health care and economic stagnation. The previous government was led by the economically liberal ODS (electoral alliance Spolu).

That's where strong criticism came from. "This is not economic policy. This is how budget gravediggers behave," ODS boss Martin Kupka said on Tuesday. President Petr Pavel also expressed criticism: “The difference of around 3 billion crowns does not change the fact that the deficit is very high.”

The acid test for the new budget is still to come: Parliament is still negotiating the exact distribution of the individual items. The debate is scheduled to begin in Parliament on October 21st and an agreement will be reached at the beginning of December. Then President Pavel has to countersign the budget - he has already announced a thorough review. It will probably take until shortly before Christmas for the final approval.

If timely adoption fails, the Czech Republic will face a so-called provisional budget. Until the final agreement is reached, authorities will only be able to spend at the current year's level. New projects remain blocked for the time being.