Czech 2026 budget stalled as incoming government rejects draft plan
The likely next Czech government rejected the outgoing administration’s draft 2026 budget on Monday, raising the possibility of a delayed approval and a higher-than-expected deficit.
Czech billionaire Andrej Babis’ populist ANO party, which won October’s election and is leading coalition talks, clashed with the outgoing centre-right cabinet over the budget, claiming it lacks sufficient funds to cover projected expenses, News.Az reports, citing Reuters.
The parliament’s budget committee, dominated by ANO and its prospective partners, recommended that the lower house reject the draft and demand a new proposal within 20 days, potentially with a higher deficit than the current 286 billion crowns ($13.65 billion).
ANO’s budget expert, Alena Schillerova, said that if the outgoing government cannot accommodate the committee’s changes, it should “adequately increase the budget deficit for 2026.”
The dispute increases the risk that the budget may not pass by year-end, forcing the country to operate on a provisional budget, which limits monthly spending to one-twelfth of last year’s annual expenditure.
Outgoing Prime Minister Petr Fiala’s cabinet had already resubmitted the draft to provide a starting point for the next administration. However, ANO, alongside the Motorists Party and far-right SPD, argue the draft omits funds for infrastructure projects and social programs, which could push the deficit to 381 billion crowns.
Outgoing Finance Minister Zbynek Stanjura defended the draft, saying it complied with fiscal responsibility laws, and warned the election-winning parties were using the draft as an “alibi” to justify higher spending.
Fiala’s government has steadily reduced the fiscal deficit, making the Czech Republic the only Central European state to lower it below 3% of GDP, in line with European Union rules. Finance Ministry forecasts estimate the 2026 deficit at 1.9% of GDP, unchanged from this year.
ANO’s election platform, which includes higher wages, mortgage subsidies, and tax cuts, has fueled expectations of looser fiscal policy, putting additional pressure on the upcoming government’s budget planning.
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