Czech Parliament Approves 2026 Budget with €12.5 Billion Deficit

ANO Coalition Pushes Through Record Deficit

The Chamber of Deputies approved the Czech Republic's state budget for 2026 with a deficit of 310 billion crowns (€12.5 billion) on Wednesday, March 11th. 103 deputies from the ruling ANO, SPD, and Motorists coalition voted in favor, while 88 opposition representatives voted against. This is the first budget presented by the Babiš government after taking office in December — a rewritten version of the original proposal prepared by the previous Fiala administration.

What Changed in the Budget

The new coalition significantly rewrote spending priorities. The Ministry of Labor and Social Affairs received an additional 17 billion crowns (€680 million) compared to the previous proposal for mandatory expenditures — mainly for the valorization of social benefits and increasing salaries in the public sector. 26 billion crowns (€1.04 billion) were added to transport infrastructure. In the final vote, deputies also added 800 million crowns (€32 million) to support sports.

On the other hand, the Ministry of Defense lost 21 billion crowns (€840 million) compared to the original government proposal. Defense spending thus remains at approximately 1.7 percent of GDP — significantly below the NATO commitment, which requires member states to spend at least two percent, while at the Hague Summit in 2025, the alliance approved a prospective target of 3.5 percent by 2035.

Warnings from Overseas and from Domestic Institution

The cuts in the defense budget did not go unnoticed. The US Ambassador to NATO warned that if the Czech Republic does not meet its commitments, it affects the entire alliance. With current spending, the Czech Republic would rank among the lowest contributors within NATO.

The National Budget Council (NRR) warned that the approved budget violates the law on budgetary responsibility. According to the NRR, the deficit corresponding to the legal limit could reach a maximum of 247 billion crowns (€9.9 billion) — the approved version exceeds this ceiling by more than 60 billion (€2.4 billion). The government is aware of the problem but shifts responsibility with the argument that it inherited an unbalanced budget from the previous coalition.

Sharp Criticism from the Opposition

The opposition submitted over a hundred proposals for the transfer of funds — all of which were rejected by the coalition majority. ODS Chairman Martin Kupka described the approved budget as a gamble with the security and future of citizens. Pirates and other parties criticize what they call populist spending in an election year — the next parliamentary elections are in the autumn of 2026.

"We have approved the first budget that probably violates the valid law on budgetary responsibility," the opposition warned after the vote.

President Signs, Questions Remain

President Petr Pavel signed the law on Friday after a meeting with Prime Minister Babiš. Although Pavel criticized the budget, he refused to veto it, justifying this with the desire to avoid prolonging the budget provisional.

Meanwhile, economists warn that increasing public debt during a period of relatively good economic growth is short-sighted. "In good times, the state should not increase debt," one of the economists interviewed told Hospodářské noviny. A deficit of 310 billion crowns (€12.5 billion) — approximately 20 billion (€800 million) more than last year — means that the Czech Republic is entering an election year with growing debt and without structural reforms that would stabilize it in the long term.