Czech government approves inflation-fighting budget to cut record deficits

Extra budget revenue, seen at 62 billion crowns, is expected to go toward cutting the deficit as well as for an already planned extraordinary pension hike and aid for households needing help to cover rising energy bills. The government plans savings in operational costs, among other cuts.

The Czech Republic's centre-right government approved a revamped 2022 budget on Wednesday, cutting the proposed deficit to 280 billion crowns ($13.2 billion) as it seeks to rein in record fiscal gaps and take pressure off surging inflation.

The country, one of the European Union's best budget performers last decade, has seen a debt explosion in recent years caused by the coronavirus pandemic and fast-rising spending commitments on state wages and pensions. After taking power in December, the new five-party ruling coalition rejected the budget draft it inherited and aimed to rewrite plans to cut spending by 80 billion crowns and help tame a debt rise that is among the fastest in the EU.

Finance Minister Zbynek Stanjura, who announced the approval on his Twitter account, said the government achieved the lower deficit, which is below a previously planned target of 377 billion crowns, without tax rises. The new 2022 plan sees 76.6 billion crowns in savings versus the previous draft, along with higher budget revenue amid forecast economic growth of 3.1%.

Prime Minister Petr Fiala has called his government's plans anti-inflationary as the central European country of 10.7 million battles surging energy costs hitting households and companies. Extra budget revenue, seen at 62 billion crowns, is expected to go toward cutting the deficit as well as for an already planned extraordinary pension hike and aid for households needing help to cover rising energy bills.

The government plans savings in operational costs, among other cuts. It plans also lower-than-planned payments into the healthcare system.

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