Government approves draft state budget for 2017

Andrej Babiš, photo: CTK

The Czech government on Wednesday approved its draft budget for 2017. The proposal envisages a deficit of 60 billion crowns and promises wage hikes for civil servants, doctors, nurses and teachers. While the opposition has criticized it for “excessively generous handouts”, the government’s comfortable majority in Parliament should secure the bill’s approval.

Andrej Babiš, photo: CTK
An early morning cabinet meeting on Wednesday removed the last hurdle on the road to the budget’s approval in the Cabinet: Interior Minister Milan Chovanec and Finance Minister Andrej Babiš reached a compromise agreement on additional funds for the Interior Ministry. Although Chovanec had asked for a 1.1 billion crowns increase he eventually accepted Babis’ offer of 420 million.

All other chapters have been closed, meeting the finance minister’s original deficit target of 60 billion crowns. Due to the country’s healthy economic growth, the 2017 budget proposal envisages pay hikes for civil servants, doctors, nurses and teachers. Police officers, firefighters and soldiers can also look forward to higher wages. And pensioners should get an additional 300 crowns to their monthly pensions, which average at just over 11,000 crowns. The proposal envisages higher expenditures for security and defense and an additional 3.7 billion crowns for science and research.

Illustrative photo: jannoon028 / FreeDigitalPhotos.net
Earlier this month the ministry lowered the projected budget expenditures (now at 1304.7 billion crowns) and revenues (1244.7 billion) by 15.4 billion crowns, due to newly specified revenues from the EU budget. The draft also sets medium-term expenditure ceilings for 2017 and 2018, when the public finances deficit should not exceed 0.5 percent of the GDP. According to the Maastricht criteria the national budget deficit should be below 3 percent of the GDP.

The draft budget proposal is to be presented to the lower house by the end of the month where it is likely to trigger heated debate. The center-right opposition parties have already expressed numerous reservations, accusing the government of squandering public funds at a time of economic prosperity and are demanding that the deficit be slashed by a half to just 30 billion.

Miloš Zeman, photo: Filip Jandourek
President Miloš Zeman, who recently praised the government for its economic performance and a significantly lower deficit than projected for this year, has also joined the critics of the 2017 budget proposal. He said that the government had taken a populist line ahead of the autumn regional and Senate elections, and that instead of giving voters presents in the form of wage hikes and subsidies it would have been better advised to boost investments, since the economic boom could not be expected to last forever.

Although the opposition wants the draft budget returned to the government for a rewrite, the ruling coalition’s comfortable majority in both houses of Parliament should ensure its smooth passage.