Czech Republic's Money Woes: Bigger Deficit on the Horizon

The Czech Republic is facing a bigger budget shortfall than planned. The new finance minister, Alena Schillerova, revealed that the deficit has already surpassed the initial target. When she started her role on December 15, the deficit was at 266 billion crowns. Just four days later, it grew to 275 billion crowns. She stated that hitting the original goal of 241 billion crowns seems unlikely. This year, the deficit was supposed to shrink from the 271. 4 billion crowns seen in 2024. However, the new government, led by billionaire Andrej Babis, has plans to increase spending. Babis' party, ANO, won the October election with promises to raise wages and boost spending. Analysts predict that the government will ease up on fiscal rules. The previous government had managed to keep the deficit below 3% of the country's GDP, meeting EU rules.The new government is also working on the 2026 budget. They believe the previous administration's draft was missing some necessary expenses. This suggests that the deficit for next year will be higher than the originally proposed 286 billion crowns. Schillerova mentioned that the government aims to approve a revised draft by the second half of January. The Czech Republic's economic situation is complex. The new government's plans to increase spending could lead to a larger deficit. However, it remains to be seen how this will affect the country's economy in the long run. The government must balance the need for economic growth with the need to keep the deficit under control.