Fiala government approves budget deficit cut

Petr Fiala

The Czech government has approved a draft state budget for 2022 that envisages a considerably lower deficit than that proposed by their predecessors.

The Fiala cabinet will put a budget with a CZK 280 billion deficit to MPs by the end of March. The previous administration of Andrej Babiš proposed a budget with a deficit almost CZK 100 billion higher.

The Fiala budget envisages a gap over one-quarter smaller than that planned by the last government. The deficit will also be 33 percent lower than last year’s, which set a new record.

One major change is that a rise in health insurance contributions for the unwaged approved by the last, ANO-led government has been scrapped.

The new draft budget also envisages widespread savings on expenditures, as the current five-party government seeks to bring more balance to the state coffers.

The state has been operating on a provisional budget for 2022 since the turn of the year. This will come to an end once MPs approve the new one before April. The first reading is due at the end of next week.

Speaking after the government rubberstamped the draft budget on Wednesday, Prime Minister Petr Fiala described it as truly anti-inflationary.

He said that his cabinet had managed to allocate sufficient funding for the country’s priorities going forward, without raising taxes.

Mr. Fiala accused the previous cabinet of indebting citizens. He and his colleagues had to respond to that, he said, adding that they also had to find an answer to growing inflation.

The PM said responsible management, financial resources for education and investment were the budget’s top priorities.

He also reaffirmed the government's commitment to keep teachers’ salaries at 130 percent of the average wage. He said no cuts had been made to planned spending on transport infrastructure and that the budget index-linked old age pensions.

However, the country’s trade unions have hit out at some austerity measures in the budget.

They are opposed to the freeze on health insurance contributions paid by the state on behalf of seniors, children and the unemployed; the Ministry of Finance says this move will save the state CZK 14 billion.

The unions are also seeking to negotiate salary increases for their members.

Czech inflation is projected to average 8.5 percent in 2022 and the unions say that real wages could drop for the first time in eight years.

The Fiala budget will see all government ministries receive more than they did last year – but less than what they would have got under Mr. Babiš’s promises.