Prague, Czech Republic – The Czech cabinet has granted approval for a preliminary draft of the state budget, projecting a deficit of CZK 235 billion. Finance Minister Zbynek Stanjura announced the anticipated revenue to be CZK 1.899 billion, while expenditures are expected to reach CZK 2.134 billion. Prime Minister Petr Fiala clarified that the agreed deficit amount is provisional, with the final figure expected to fall between the approved CZK 235 billion and the CZK 270 billion ceiling set by the government last week.

Stanjura acknowledged that the projected revenues and expenditures may change following the Finance Ministry’s macroeconomic forecast in August. The precise structure of the budget is still subject to political discussions, with the government aiming to finalize it by the end of September.

“These are preliminary proposals for revenues and expenditures of individual chapters, and negotiations are yet to commence,” stated Stanjura. He further explained that the approved limits for each chapter would be refined, leading to discussions among the economic deputies of the ministries regarding the final form of the budget, followed by consultations among the ministers.

Prime Minister Fiala emphasized that the negotiation process for budget allocation would be a collective effort, with individual ministers not negotiating funds for their respective chapters independently. He expressed his belief that such discussions are part of responsible conduct by all ministers.

The approved budget deficit for the current year stands at CZK 295 billion. However, doubts have been raised by the National Budget Council and economic analysts regarding the feasibility of maintaining it at this level. As of the end of May, the deficit had already reached CZK 271.4 billion.

Minister Stanjura announced that discussions on additional cost-saving measures to achieve a balanced budget would commence next week. He expressed optimism that an agreement could be reached by mid-July, underscoring the government’s commitment to fiscal stability.

The approval of the preliminary draft budget marks a significant step in the Czech Republic’s financial planning for the coming year. As the government navigates the complex process of finalizing the budget, careful consideration will be given to balancing the country’s fiscal needs with economic realities, ensuring sustainable growth and prudent financial management in the face of ongoing challenges.

Article by Prague Forum