President Petr Pavel yesterday signed the Czech state budget for 2025, with a deficit of CZK 241 billion. In a video on social media yesterday afternoon, he said he had been considering whether to sign it for a long time, and the decision had not been easy.
The president had some reservations about the budget, arguing that some of the projected revenues and expenditures are not realistic.
Pavel said yesterday that he had received personal guarantees from Prime Minister Petr Fiala and Finance Minister Zbynek Stanjura (both ODS) that the deficit next year would not exceed the planned level, and that the government would not violate the law on fiscal responsibility. “The government will bear political and moral responsibility for this guarantee,” the president said.
Pavel said that after weighing all the pros and cons, he considered signing the budget a better option for the country and its citizens.
“It would be easy to make a strong gesture when it is obvious that my veto will be overridden by the lower house. However, I considered it more useful that the shortcomings about which I warned the government be corrected in some way,” Pavel said.
Compared to this year’s amended budget, the deficit will fall by CZK 41 billion, government revenues will increase by CZK 146 billion, and spending by CZK 105 billion. Most of the deficit will be covered by a CZK 248 billion increase in the national debt.
The president’s economic advisers had reservations about the budget; economist David Marek even said that he would not recommend the head of state to sign it. The reservations were based on the comments of the National Budgetary Council (NRR), which warned that the forecast revenues from the sale of carbon credits were overestimated.
Pavel then held talks with Fiala and Stanjura. The prime minister said afterwards that he believed they had persuaded Pavel to sign the state budget.
The government identified the main priorities of the budget as consolidating public finances, boosting investment, and dealing with the consequences of the recent floods, as well as maintaining social peace.
Fiala earlier described the budget as a more than reasonable compromise, while the opposition criticised it. In the first reading, Stanjura called the budget forecasts realistic, and said it would contribute to social peace.
In yesterday’s video, Pavel acknowledged that the government had begun consolidating public finances three years ago, and said that even though it would be an election year, the budget for 2025 was not wasteful. “But it will not be enough for the future and reforms will have to continue,” the president said. He praised the promised significant investments and the meeting of the NATO defence commitments.
NRR has also repeatedly called for continued efforts to consolidate the public finances. It said the previously approved measures would be sufficient to fulfil the budget responsibility law by 2026, but that more reforms would be necessary in the next election term to further reduce the structural budget deficit.
MPs voted to transfer around CZK 3 billion crowns within the budget. They originally proposed transfers totalling around CZK 224 billion.
For example, half a billion more was added to the salaries of employees in the judiciary, and CZK 700 million for water infrastructure, as well as over CZK 1 billion to staff of the police and fire brigade. The budget also includes a CZK 60 million investment subsidy for the Prague Castle Administration to be used to protect the grounds of Prague Castle, where the Presidential Office is seated, and the Lumbe Villa, where President Pavel and his wife Eva live.
