Government budget for 2017 draws fire from both sides of opposition

After a seven hour debate and many motions for changes, the government coalition rallied its troops and won sufficient support to push through its planned 2017 budget which foresees a slight reduction in the planned state deficit.

Andrej Babiš, photo: ČTK

Setting a budget target for the next year is a bit like playing blindfold darts, you know the number you’re aiming at but there is a pretty good chance you’re going to hit another one. And recent Czech history has shown finance ministers erring on the cautious side and usually crossing the end of the year accounting line with much better performances than predicted.

This year the budget deficit was targeted at 70 billion crowns but finance minister and ANO leader Andrej Babiš now says the state should end up with a surplus of between 20 and 40 billion crowns. That would be the first budget surplus since 1995.

Photo: ČTK

Undershooting the deficit target has been the clear trend for the last five years and there’s little reason to expect the 2017 deficit of 60 billion crowns that lawmakers backed late Wednesday should be any different. With growth next year estimated at 2.9 percent by the Czech National Bank, compared with 2.8 percent this year, there’s every chance that the final budget figure will be better than this.

Thursday’s final reading budget vote followed a seven hour debate in the lower chamber, where the government coalition held firm against criticism from both the left and right wing opposition. While the Communist Party of Bohemia and Moravia attacked the government for not planning to spend more, but the right wing opposition said it should be doing more to curb spending when the times are still relatively good. The Civic Democratic Party called unsuccessfully, for example, for 29 billion crowns to be transferred from planned budget spending to cut the country’s overall debt.

And former finance minister and leader of the TOP 09 party, Miroslav Kalousek, no friend of Andrej Babiš for sure, made a similar attack.

Miroslav Kalousek, photo: ČTK

“It’s clearly good news that the Czech Republic has a budget – the country needs a budget and it means stability. On the other hand, it’s bad news that there is massive spending and that will burden taxpayers. We wanted a budget that would save more, be more effective, and above all that would have different priorities.”

Kalousek says more money should have been earmarked for research and development, education, and other areas that would boost the country’s competitive position rather than hiring more government officials, which he claims is what the government is doing. And the opposition argues that a large part of this year’s spending undershoot has been bought through shrinking outlay on big infrastructure projects.

The government’s budget plans give some hints where its priorities are. There are fairly big boosts in the budgets for environment, regional development, transport, foreign affairs, and defense. Health, farming, and trade and industry ministries though see low rises or even cuts in the latter instance. The head of state’s office also sees a fairly hefty 7 percent cut in its allocation. But the ship of state is a pretty big vessel and cumbersome with finance ministers often having little room to change the course that much.