Row over public spending as president vetoes government’s budget rules reform
Czech President Petr Pavel has vetoed a controversial amendment to the country's budget rules that would allow the government to exceed the approved state spending framework by up to CZK 200 billion. The ruling coalition is determined to override the veto, arguing that the lack of extra funds planned would put at risk the country’s economic growth, defense capabilities and health care.
Under the approved version of the amendment, in the course of the next 10 years the Czech government would be able to exceed approved state spending by up to 10 percent—currently around CZK 240 billion—if the security situation worsens. It would enable the cabinet to increase defence spending above the parliamentary budget framework by CZK 150 to 200 billion by excluding many major expenditures from the budget calculation, including spending on motorways, railways and dams.
This loosening of purse strings has met with fierce criticism from the opposition and has raised concern among economists who argue that the bill would jeopardize the long-term sustainability of public finances.
The bill was approved by the Chamber of Deputies in July after the ruling coalition overrode amendments proposed by the Senate, which had sought to impose stricter conditions on the government's ability to increase spending.
In a post on X, President Pavel explained why he had used his right of veto.
"This law allows the government to borrow significantly more than it can today over the next ten years. If the state creates rules that make it easier to increase spending through borrowing, we will all ultimately pay the price. Our state debt is already growing at a pace that is no longer sustainable.
President Pavel also criticized the bill for expanding the government's ability to increase certain expenditures without parliamentary approval. He stressed that he was not questioning the importance of investments, but said they must remain subject to "clear rules, responsible fiscal management and democratic oversight."
Prime Minister Andrej Babiš slammed the veto, calling it “irresponsible, ill-considered and activist".
"With this decision, the president is endangering Czech healthcare, our country's defense capabilities, the construction of schools, the safety of our citizens and the development of energy resources. By this step he has fully confirmed his position as "the leader of the opposition" .
Finance Minister Alena Schillerová (ANO) said the ruling coalition would call a special session of the lower house in August and use its majority to override the president’s veto.
“Without the amendment, next year's budget deficit could not exceed CZK 150 billion, compared with the planned CZK 310 billion deficit this year. This would put absolutely everything at risk, ” she warned.
The opposition parties have welcomed the president’s decision.
Civic Democratic Party leader Martin Kupka said the president had highlighted concerns his party had raised for months, warning that the bill threatened the long-term sustainability of public finances and weakened parliamentary oversight.
The Mayors and Independents (STAN) said the proposal would allow the government to continue increasing public debt unchecked and argued that fiscal responsibility should instead be enshrined directly in the Czech Constitution.
The opposition has already announced that it intends to challenge the legislation before the Constitutional Court if it ultimately comes into force.