The Czech Ministry of Finance is proposing a budget deficit of 389bn crowns ($18.7bn) for 2027, while it expects a deficit of 310bn crowns ($14.9bn) this year. According to Minister Alena Schillerova, basic defense spending is set to reach 2% of GDP.

The government also wants to invest more in roads, railways, healthcare and public sector salaries. The deficit is projected to be 3.5% of GDP. However, when assessing EU budget targets, the deficit would be calculated at 2.8% due to an exemption for a portion of defense spending. This year, the deficit is expected to be 2.7%. In 2025, it reached 2.1%.

Schillerova argues that a lower deficit would lead to unfinished construction projects, reduced access to healthcare and economic stagnation. The government plans to reduce it starting in 2028. The opposition criticizes the proposal and calls such a deficit unacceptable given economic growth of around 2% and low unemployment.

Andrej Babis’s government had previously reduced this year’s defense spending to slightly more than 1.7% of GDP. Meanwhile, NATO is calling for an increase in baseline defense spending to 3.5% of GDP and total defense related spending to 5% by 2035.

Public debt is projected to reach 45.8% of GDP by the end of 2026. The cost of servicing that debt is expected to rise by 18% next year to 130bn crowns ($6.3bn).

(Reuters, bak)