Chamber of Deputies approves state budget for 2025

The state budget for 2025, which includes record investments in transport infrastructure, increased spending on education, science and defence, and spending to deal with the consequences of the September floods, has been approved by the Chamber of Deputies in its third reading and now awaits the signature of the President of the Republic. The deputies approved a total of 11 amendments and the budget deficit remained unchanged at CZK 241 billion.

With the State Budget 2025, the Government continues its consolidation efforts and implements the programme priorities it committed to in its Programme Statement. Zbyněk Stanjura, Minister of Finance

"With the State Budget 2025, the Government continues its consolidation efforts and delivers on the programme priorities it committed to in its Programme Statement. Due to the September floods, one more priority has been added to these commitments, namely the reconstruction of the affected areas, especially in the Moravian-Silesian and Olomouc regions," Finance Minister Zbyněk Stanjura commented on the approval of next year's budget. 

However, the extraordinary flood expenditures of CZK 10 billion should not enter the structural deficit and its reduction should therefore continue in 2025 at the legal rate of 0.5 % of GDP. The medium-term budget outlook envisages a state budget deficit of CZK 225 billion in 2026 and a deficit of CZK 180 billion in 2027.

"This government has set a solid foundation for its successors, from whatever part of the political spectrum, to continue to reduce budget deficits and grow the economy overall." added Minister Zbyněk Stanjura.

Note: Excluding money from the EU and financial mechanisms, the draft state budget envisages revenues of CZK 1931.8 billion (vs. CZK 1811.4 billion in 2024), expenditures of CZK 2172.8 billion (vs. CZK 2063.4 billion) and a deficit of CZK 241.0 billion (vs. CZK -252.0 billion).

Of the total expenditure CZK 2327.1 billion forms the largest volume Mandatory and quasi-mandatory expenditure (salaries and EU contributions) in the amount of CZK 1,796.9 billion (year-on-year increase by CZK 62.7 billion). Of this, the Mandatory, i.e. statutory expenditure will reach CZK 1369.1 billion (+35.2 billion CZK). investments from national sources CZK 153.5 billion (year-on-year increase by CZK 35.6 billion), or CZK 249.6 billion after including EU funds (year-on-year increase by CZK 65.0 billion), current government expenditure will increase by CZK 70.0 billion, i.e. by 3.5 %. 

The structure of spending reflects the government's priorities. Funding for Education were increased by CZK 21.9 billion in the chapter of the Ministry of Education, including EU sources, which also includes a year-on-year increase in expenditure on universities by CZK 4.0 billion from national sources. Thus, higher education will receive CZK 1.0 billion more than in the August draft budget. The government has thus used the CZK 1.0 billion available as a reserve up to the maximum allowed budget deficit under the expenditure frameworks. Total spending on science, research and innovation will increase by CZK 3.7 billion year-on-year to CZK 51.6 billion, including EU funds. The largest share will go to the Ministry of Education (CZK 22.9 billion, an increase of CZK 2.4 billion). The budgets of the chapters of the CAS, TAČR, GAČR and the Ministry of Health will also be strengthened. 

State investment will be directed primarily to transport infrastructure, capital expenditures of the Ministry of Transport will reach a total of CZK 93.3 billion including EU resources (an increase of CZK 51 billion). "At the moment, 42 sections of motorways have been built and next year the construction of more than 100 km will begin, for example the Prague ring road from Běchovice to D1, another part of the D35 motorway to Lipník n. Bečvou or the bypass of Breclav. Railway corridors will also be expanded," says Minister Stanjura. 

Mandatory expenditure (CZK 1 796.9 billion) represents social transfers and subsidies (social benefits including pensions) amounted to CZK 936.8 billion (increase by CZK 26.6 billion), of which pensions CZK 717.2 billion (an increase of CZK 11.0 billion). Debt service expenditure are expected to reach CZK 100 billion next year (an increase of CZK 5 billion). The statutory annual volume defence spending 2 % of GDP (in 2025 it is CZK 160.8 billion) is spread over several budget chapters - in addition to CZK 154.4 billion in the chapter of the Ministry of Defence, defence expenditures are also made in the chapters of the SSHR, NUCIB, NSA and MFA. 

For teachers, who are guaranteed by law 130 % of average salary, 7 % more was allocated for salaries than last year (a total of CZK 103.5 billion, an increase of CZK 6.6 billion), while for other civil servants the budget foresees an increase in the amount of money for salaries by 5 % (total CZK 286 billion, an increase of CZK 19.4 billion). In their case, however, the government has yet to decide whether the increase will go exclusively to the tariff component or also to the above-tariff component and in what proportion.  

The largest budget chapters (including EU funds) are still the Ministry of Labour and Social Affairs with the budget funds amounting to CZK 968.8 billion (year-on-year increase by CZK 42.2 billion due to the increase in mandatory expenditures by law), the Ministry of Education with the budget of CZK 290.8 billion, and the Ministry of Education with the budget of CZK 1.5 billion. CZK (year-on-year increase of CZK 21.9 billion), the General Treasury Administration with CZK 269.1 billion (decrease of CZK 4.5 billion), the Ministry of Defence with a budget of CZK 154.4 billion (increase of CZK 3.2 billion) and the Ministry of Transport with a budget of CZK 139.5 billion (increase of CZK 35.8 billion). 

The total state budget revenues should reach CZK 2,086.1 billion in 2025, of which the collection of social security contributions is expected to amount to CZK 809.4 billion (up by CZK 53.2 billion year-on-year), VAT collection is expected to amount to CZK 414.0 billion (+ CZK 27.2 billion), excise tax collection is expected to amount to CZK 157.0 billion (- CZK 1.7 billion). The budget also includes revenue of CZK 153.6 billion from the EU budget and financial mechanisms. 

Beyond the original draft state budget, MPs approved a total of 11 amendments worth CZK 3 billion, most of which modify transfers of funds within individual budget chapters. A detailed overview of the planned expenditures of individual budget chapters after taking into account the approved amendments will be published once the amendments have been incorporated. 

MF/ gnews - RoZ_07

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