Czech Prime Minister Babis signals wider 2027 budget deficit

Prime Minister Andrej Babis of the Czech Republic has indicated that the national budget deficit for 2027 could expand further to accommodate increased spending on critical infrastructure and public services. In an interview with the tabloid Blesk on Tuesday, Babis emphasized that the government is prioritizing investments in healthcare and transport networks. > "Investments come first, we will also build the budget for next year accordingly." This announcement follows the recent passage of a revamped 2026 budget, which already saw an increase in the deficit target compared to the plans of the previous administration. The current populist-led coalition, which assumed power in December, has sought to move away from years of austerity. The 2026 budget projects a shortfall of 310 billion crowns ($14.7 billion), up from the 286 billion crowns initially proposed by the outgoing center-right government. While the government has increased funding for wages and infrastructure projects like road construction, it has faced significant pushback regarding defense spending. President Petr Pavel, who signed the 2026 budget into law last week, expressed concerns that the allocated funds for defense do not align with current security challenges or the country's commitments to NATO. Despite the planned increase in spending, the fiscal position of the Czech Republic remains within international limits. Deficits have averaged approximately 2% of gross domestic product over the last two years, remaining comfortably below the European Union's 3% threshold. Babis, who has positioned the budget as a primary tool for economic growth, noted in a separate interview with Czech Television that a deeper deficit for the upcoming year cannot be ruled out.