In a significant fiscal move, President Petr Pavel has officially signed the state budget for the upcoming year, revealing a deficit of 252 billion crowns. This marks a noteworthy reduction of 43 billion crowns compared to the approved deficit of the current year. The announcement was made by the Castle on Monday evening, emphasizing the financial prudence exercised by the administration.

This budget, the first signed by President Pavel during his term, represents the third fiscal plan pushed through by the coalition government led by Prime Minister Petr Fiala (ODS). The House had previously approved the budget on November 29, solidifying the government’s financial roadmap.

Key highlights of the budget include a planned increase in budget revenues by 12 billion to reach 1.94 trillion crowns, while planned expenditures are set to decrease by 31 billion to 2.19 trillion crowns. Grounded in the assumption of a 2.3 percent economic growth rate, the budget also anticipates a rise in household consumption, supported by an increase in real incomes. Furthermore, the forecasted average inflation rate is expected to drop from 10.9 to 2.8 percent in the coming year.

Aimed at addressing social and economic priorities, the budget allocates funds for key initiatives. Notably, the plan includes provisions for increasing the average teacher’s salary to 52,400 monthly crowns, and the average pension is set to rise to 20,635 crowns from January. Expenditures on debt service will also see a yearly increase, reaching 95 billion crowns, reflecting the government’s commitment to managing financial obligations.

Prime Minister Fiala emphasized the budget’s primary priorities, including maintaining social peace, ensuring stable healthcare financing, securing competitive salaries for teachers at 130 percent of the average wage, and allocating expenditures equivalent to two percent of the gross domestic product for defense. Despite grappling with challenges such as record debt and high demands on debt service costs, Fiala expressed confidence in the government’s ability to navigate these complexities and steer the nation towards balanced financial management. The budget, as signed by President Pavel, stands as a testament to the government’s commitment to responsible fiscal governance amid ongoing challenges and inherited burdens.

Article by Prague Forum