The Czech Chamber of Deputies has definitively approved controversial changes to the rules for drafting public budgets. The ruling coalition on Wednesday, August 26th, overrode President Petr Pavel's veto and opened up more space for the government to spend on defense, strategic infrastructure, and extraordinary expenses in the event of a worsening security situation. The opposition warns against further indebtedness and has announced that it will appeal to the Constitutional Court.
The law was re-approved with 104 votes from coalition members, while 72 opposition lawmakers voted against it. This allows the Chamber to override the President's veto, and the amendment can now come into effect.
More room for defense and major construction projects
One of the most significant changes is the extension of the possibility to increase defense spending beyond approved budget limits until 2036, which is three years longer than under current rules. Defense spending above two percent of GDP will not be included in the established limits.
A similar regime now also applies to strategic infrastructure projects, such as some transportation, water management, or energy construction projects. The amendment also allows the government to increase approved state budget expenditures by up to ten percent if such a step is proposed by the State Security Council. Under this year's budget, the theoretical upper limit would be approximately 240 billion crowns.
Pavel warned against weakening control
President Petr Pavel vetoed the law on July 22nd. In his justification, he pointed out primarily the risk of long-term unsustainability of public finances and a weakening of parliamentary oversight over the budget.
He considered it particularly problematic to exclude some infrastructure expenditures from the budgetary framework. He also pointed to an estimate by the National Budget Council, according to which the Czech Republic could face what is known as a "debt brake" around 2037. The President also criticized the reduction of some control mechanisms within the Chamber.
Schillerová: Without changes, it is impossible to create a realistic budget
The Minister of Finance, Alena Schillerová (ANO), rejects the criticism. According to her, the change itself does not automatically increase the deficit, and the government needs new rules in order to prepare a "responsible, realistic, and transparent budget." The cabinet also declares that it wants to keep the public finance deficit well below the three percent of GDP threshold.
The opposition, on the other hand, speaks of a significant loosening of fiscal rules and fears that the government is gaining too much room for spending financed by debt. Therefore, the dispute does not end with the override of the presidential veto. The next act will take place before the Constitutional Court, where the opposition intends to challenge some of the new rules.
gnews.cz - GH