President Zeman signs 2021 state budget with a deficit of more than €12 billion

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On Tuesday, Czech President Miloš Zeman signed the state budget proposal for the next year with a deficit of 320 billion korunas (€12.15 billion). When approving the budget, the Chamber of Deputies took 10 billion korunas (€380 million) from the budget of the Ministry of Defense, and, on request of the Communist Party (KSČM) transferred them to the government budget reserve. The move provoked strong criticism from the opposition, however, Prime Minister Andrej Babiš assured deputies that the money would be soon returned to the army budget. The approved proposal is based on the assumption of economic growth of 3.9 percent. Among other things, the draft budget counts on revenues from the digital tax, which has not yet been approved by the Chamber of Deputies. The opposition responded by criticizing the budget as unrealistic.

On the contrary, Finance Minister Alena Schillerová emphasized that this is a post-crisis budget, which responds to the coronavirus pandemic issues and does not harm the economy by increasing taxes or introducing cuts. Besides, according to her, the Czech state can borrow money cheaper than, for example, citizens, companies, or local governments. For the next year, the government identified an increase in the average old-age pension as one of the main priorities. Other priorities include, for example, a nine percent increase in teachers’ salaries. For 2020, the original budget proposal approved last December counted on a deficit of 40 billion korunas (€1.5 billion). However, due to the coronavirus pandemic, the Chamber of Deputies gradually increased it to 200 (€7.6 billion), later to 300 (€11.4 billion), and then to 500 billion korunas (€19 billion).

Title image: President Miloš Zeman with PM Andrej Babiš and finance minister Alena Schillerová (The Office of the President Twitter account)

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