The three parties preparing to form the next Czech government have rejected the outgoing administration’s draft budget for 2026, arguing that it fails to adequately finance critical spending areas. On Monday, the parliamentary budget committee recommended that lawmakers return the proposal to the cabinet with instructions to cover a shortfall of at least 95 billion koruna ($4.5 billion). The full chamber, in which a coalition around the populist ANO party holds a majority, is scheduled to vote on the plan Wednesday.
Czechia is in a transitional phase after ANO, led by billionaire Andrej Babis, won the October election but has yet to form a new government. The budget committee’s action is expected to trigger a provisional budget early next year, potentially increasing the country’s deficit. Alena Schillerova, ANO’s nominee for finance minister, criticized the draft, saying it would “mean a paralyzed state, which would be turning off one critical function after another.”
The outgoing government had projected a deficit of 286 billion koruna, with total public finance shortfalls — including municipal and off-budget funds — of around 2% of GDP. Officials argued that the proposal complied with legal expenditure limits and already included increased defense spending. However, Schillerova noted that mandatory allocations for pensions and health care were understated, and funding for planned transportation projects was missing.
If the budget is not enacted by the end of the year, Czechia will operate under a provisional plan that limits monthly spending to one-twelfth of the previous year’s expenditures, a mechanism used following the last election four years ago. The outgoing cabinet has 20 days to adjust spending or expand the deficit to address the gap, but Schillerova indicated that the incoming government will ultimately need to overhaul the fiscal plan. “It’s now clear that we are headed into a provisional budget,” she said at a parliamentary briefing.
The dispute highlights the challenges facing the new administration as it assumes power and underscores the continuing need to balance fiscal responsibility with financing for essential public services.
