Cabinet approves draft budget for 2020

Miloš Zeman, Andrej Babiš, photo: ČTK/Michal Krumphanzl

Prime Minister Andrej Babiš’ cabinet approved the 2020 draft budget on Monday, just hours after trade union leaders and employers expressed support for it. The compromise proposal which respects a 40 billion crown deficit ceiling should see more money spent on pensions, social services, teachers’ wages, parental benefits as well as research, sport and investments.

Miloš Zeman,  Andrej Babiš,  photo: ČTK/Michal Krumphanzl
The budget draft for 2020 projects expenditures at 1,618 billion crowns and revenues at 1,578 billion, with a 40 billion crown deficit. It was approved unanimously by government ministers, after the Social Democrats’ call for more money to be spent of socially vulnerable groups of the population was met.

The biggest increase will go to pensions, which will rise by 900 crowns on average next year, representing about a third of overall expenditures. Parental benefits are to rise by 80,000 crowns to 300,000 crowns and more money is being channelled into social services.

Employees in the public sector can expect a wage increase of 1,500 crowns a month, while teachers alone have been promised a 10 percent hike in salaries.

All this will put a bigger burden on state finances in terms of mandatory expenditures which are to reach 885.1 billion crowns next year, a 7.3 percent increase against 2019.

This has elicited a warning from the Supreme Audit Office, which says that the budget is not prepared for worse times when state revenues may fall below expectations.

The opposition parties say the social expenditures chapter is overly generous, criticising the government for planning deficit budgets in a period of economic growth and failing to prepare for an economic slow-down, stagnation or possibly even recession.

The Finance Ministry’s latest forecast sees GDP growth slowing to 2.2% in 2020 from an estimated 2.4% this year, with analysts warning of many external risk factors on the horizon.

The budget draft will now go to the lower house of Parliament for debate. President Zeman has already nodded to the draft bill, saying he is ready to sign it into law once it has won approval in the lower house.