Czech Budget Woes: What's Next After the Election?

Budget Deficit Worries

The recent election in Czechia has raised financial concerns, with Andrej Babis, leader of the victorious ANO party, suggesting the country's budget deficit might be larger than anticipated.

Missing Funds for Key Projects

Babis highlighted that around 60 billion Czech crowns are missing for planned projects, such as road construction. Without this funding, these projects may be delayed.

Deficit Projections

The outgoing government had planned a deficit of 286 billion crowns for 2026, up from 241 billion in 2025. Babis believes this increase might not be sufficient, as there are already planned projects requiring funding. He stated that the deficit will likely be higher unless an alternative solution is found.

Finance Ministry's Stance

The Finance Ministry defended the current budget, asserting it adheres to all rules and reflects the outgoing government's priorities. They did not address Babis' concerns about the unfunded plans.

Government Formation and Deficit Reduction

Babis is currently in talks to form a new government with two smaller parties. One of these parties advocates for a significant reduction in the deficit. However, even if they succeed, the new government cannot begin work before November, leaving little time to adjust the 2026 budget before the end of the year.

Temporary Budget Consideration

An expert from ANO suggested that the country might start 2026 with a temporary budget, meaning spending at 2025 levels. This would limit the government's flexibility.

Current Deficit and Future Projections

The current government has managed to keep the deficit below the EU's 3% limit, expecting a 1.9% deficit this year. The higher deficit projected for 2026 is primarily due to costs for a new nuclear power plant and the end of a special tax on energy companies.