PRAGUE (Reuters) -The Czech budget deficit may be wider than the outgoing government has planned, Andrej Babis, whose populist ANO party won the parliamentary election at the weekend, said on Tuesday.
Czech Election Victory Signals Potential for Increased 2026 Budget Deficit
Implications of the Election on Budget Planning
PRAGUE (Reuters) -The Czech budget deficit may be wider than the outgoing government has planned, Andrej Babis, whose populist ANO party won the parliamentary election at the weekend, said on Tuesday.
Projected Budget Deficit for 2026
Babis said about 60 billion crowns ($2.9 billion) was lacking for road building and other projects in the pipeline which will otherwise need to be put on hold.
Government Formation Talks and Fiscal Policy
The outgoing centre-right government submitted a 2026 central state budget plan targeting a deficit of 286 billion crowns, up from 241 billion seen in the 2025 budget.
Challenges Ahead for the Incoming Government
But Babis said the deficit increase would likely be bigger due to what he said were missing funds for already planned projects.
BABIS IN TALKS TO FORM A GOVERNMENT
"It will end up by a higher deficit, how else can it end up, unless we find some other solution," Babis told reporters in a televised briefing.
The Finance Ministry said the budget, which the government had approved in September, was done in accordance with budget legislation and reflected the outgoing government's priorities.
It gave no details on Babis' specific comments about unfunded plans.
The draft budget will be decided by the next parliament, which is due to first meet on November 3.
Babis, whose party promised higher wages and tax cuts as part of campaigning, is in talks to form a government with two fringe parties, one of which has called for a substantial deficit reduction.
Even if the talks are successful, the new cabinet cannot take office before November, leaving little time for 2026 budget adjustments by the end of the year.
Alena Schillerova, an ANO finance expert and former finance minister in a previous Babis government, said on Monday that it was likely the country would start 2026 on a provisional budget, which would limit discretionary spending at 2025 levels.
Prime Minister Petr Fiala's government has cut the overall fiscal gap below the European Union limit of 3% of gross domestic product and expects a 1.9% deficit this year.
The higher deficit expected in the 2026 central budget versus the 2025 plan is mainly due to costs of loans for a new nuclear power plant and the expiration of a windfall tax levied mainly on energy company CEZ.
($1 = 20.8480 Czech crowns)
(Reporting by Jan Lopatka;Editing by Alison Williams)
