Finance
Czech PM Babis Says Next Year's Budget Deficit May Widen
Published by Global Banking & Finance Review®
Posted on March 24, 2026
2 min readLast updated: March 24, 2026
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Czech Prime Minister Andrej Babiš indicated that the 2027 budget deficit may expand to accommodate increased investment in healthcare and transport, building on the already raised 2026 deficit amid criticism over reduced defence spending.
Czech State Budget Deficit May Widen in 2027 to Fund Investments
Overview of Czech State Budget Plans and Implications
Government's Approach to Budget Deficit
PRAGUE, March 24 (Reuters) - The Czech state budget deficit may widen in 2027 to make room for investments in healthcare and transport infrastructure among other areas, Prime Minister Andrej Babis said in an interview with tabloid Blesk on Tuesday.
The populist-led coalition government took power in December and this month pushed a revamped 2026 budget into law that widened the previous deficit target as Babis seeks to reverse years of austerity under a previous centre-right administration.
Spending Priorities and Criticism
But while lifting some spending such as for wages and projects including roads, Babis' government has faced criticism for lowering defence outlays.
Prime Minister's Statement on Investments
"Investments come first, we will also build the budget for next year accordingly," Babis told Blesk in a video interview on its website, when asked why next year's shortfall would be larger.
Babis had said in a weekend interview with Czech Television that a deeper deficit next year could not be ruled out.
Fiscal Context and Budget Figures
Czech fiscal deficits have been around 2% of gross domestic product the past two years, well below the European Union ceiling of 3%, giving Babis - who pledged to use the budget as a pro-growth tool - room to raise spending despite criticism from budget observers.
The 2026 budget envisages a deficit of 310 billion crowns ($14.7 billion), more than the 286 billion crowns that the previous government had proposed.
Presidential Concerns on Defence Spending
President Petr Pavel signed the 2026 budget last week but warned that defence outlays were not corresponding to growing security threats and NATO spending commitments.
($1 = 21.1140 Czech crowns)
(Reporting by Jason Hovet)
Key Takeaways
- •Budget expansion reflects Babiš’s growth-first priorities — especially in healthcare and infrastructure — reversing prior austerity.
- •2026 deficit target was raised to CZK 310 billion, exceeding legal structural limits according to the Czech Fiscal Council.
- •Despite fiscal room under EU’s 3%-of‑GDP ceiling, defence spending cuts raise concerns amid NATO commitments.
Frequently Asked Questions about Czech PM Babis says next year's budget deficit may widen
1Why might the Czech budget deficit widen in 2027?
Prime Minister Andrej Babis indicated the deficit may increase to allow more investments in healthcare, transport, and other key areas.
2What criticisms has the Czech government faced regarding the 2026 budget?
Critics argue the government has cut defence spending despite growing security threats while increasing spending on wages and infrastructure.
3What is the projected deficit in the 2026 Czech state budget?
The 2026 budget plans for a deficit of 310 billion crowns, higher than the previous government's proposal.
4How does the Czech deficit compare to EU limits?
The Czech deficit has remained around 2% of GDP, below the EU limit of 3%.
5What is motivating increased government spending under Babis?
Babis aims to use the budget as a pro-growth tool, reversing previous austerity measures.
