Czech cabinet returns $232 mln to army, partly undoing cut to win budget vote

The government gained parliamentary approval in December for a 2021 central state budget with a 320 billion crown deficit. But it secured enough votes after agreeing to Communist Party demands to shift a planned 10 billion crown increase in the NATO-member country's defence spending into reserves instead, to be used to battle the coronavirus pandemic.

The Czech government on Wednesday approved shifting 5 billion crowns ($232.42 million) back to the defence budget, half of the amount it cut last month as part of a deal with the far-left Communists to win their support for 2021 public finance plans. The government gained parliamentary approval in December for a 2021 central state budget with a 320 billion crown deficit.

But it secured enough votes after agreeing to Communist Party demands to shift a planned 10 billion crown increase in the NATO-member country's defence spending into reserves instead, to be used to battle the coronavirus pandemic. Prime Minister Andrej Babis had said then the cut would be temporary and the army, undergoing modernisation, would not lose the money.

On Wednesday, the cabinet agreed to move half of the cut back, with the remaining 5 billion crowns to be debated likely in February, Defence Minister Lubomir Metnar said on Twitter. The Czech state is facing a second year of record-high public finance gaps amid the pandemic as an income tax cut will widen the 320 billion crown deficit target even more. The Finance Ministry forecasts the 2021 public sector gap at 6.6% of gross domestic product, up from an estimated 5.8% in 2020.

The Czech army has seen increases in funding as it seeks to replace outdated Soviet-era machinery. Before the agreed cut in December, defence spending was to reach 1.4% of GDP in 2021, below a NATO target of 2%. ($1 = 21.5130 Czech crowns)

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