Incoming Czech government wants budget overhaul ready by January-February

The incoming Czech centre-right government aims to have a new 2022 budget draft ready by the end of January or early February and wants spending cuts of 80 billion crowns ($3.56 billion), finance minister nominee Zbynek Stanjura said on Thursday. The new government coalition, awaiting its official swearing-in likely later this month, wants to overhaul the budget to cut a deficit currently set around record highs at 377 billion crowns.

The incoming Czech centre-right government aims to have a new 2022 budget draft ready by the end of January or early February and wants spending cuts of 80 billion crowns ($3.56 billion), finance minister nominee Zbynek Stanjura said on Thursday.

The new government coalition, awaiting its official swearing-in likely later this month, wants to overhaul the budget to cut a deficit currently set around record highs at 377 billion crowns. The coalition will consist of five parties who together won a majority in the October election. They criticised the outgoing government for causing fast-rising debt in recent years with steep pension and wage hikes and a record tax cut, which magnified budget stress caused by the coronavirus pandemic.

Stanjura said on Thursday the cuts of 80 billion crowns were part of the new government's plans. "I understand it as a part of the future programme of the government, of a future pledge, and of the future budget which we will submit to the parliament," he said.

Stanjura said the coalition could have a draft ready to submit to parliament by the end of January or the week after. In the meantime the state will start 2022 with a provisional budget that will limit new spending, although analysts say this poses no risk if it lasts only a short time.

The incoming government has pledged to bring deficits back below the European Union-mandated 3% of gross domestic product ceiling during its term. Under finance ministry forecasts, the fiscal deficit should peak at over 7% of GDP in 2021 before falling to 4.4% next year. Stanjura reiterated on Thursday a pledge not to hike taxes. Last week the state's Fiscal Council said higher revenue, mainly through higher taxes, was needed in fiscal consolidation plans. ($1 = 22.4590 Czech crowns)

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