Czech parliament gives final approval to bill relaxing fiscal rules

The Czech lower house ​of parliament overrode a presidential ‌veto on ​Wednesday and gave the final approval to a bill relaxing national budget deficit rules, giving the government more ‌room for spending.

The result was expected as the government led by the eurosceptic populist party of Prime Minister Andrej Babis holds a comfortable majority. Lawmakers in the lower ‌house first approved the bill in May before it was rejected by the ‌upper house, the Senate, and by President Petr Pavel.

Pavel, the opposition and the national budget watchdog, have all said the law threatens long-term fiscal sustainability and widens the government's room to raise ⁠spending ​without parliamentary approval. The bill ⁠exempts a long list of road, rail, nuclear power plant and dam projects from calculations for ⁠budget deficits. It also extends an exemption given to defence spending if it exceeds 2% ​of gross domestic product. The bill also allows the government to raise ⁠spending by up to 10% under loosely defined security threats, which the opposition says is an unacceptable ⁠relaxation. The ​country's independent budget watchdog has called the changes a fundamental weakening of fiscal discipline. The government says it is necessary as current rules mandate impossible budget ⁠cuts. Finance Minister Alena Schillerova has said the cabinet would keep the deficit ⁠under 3% of ⁠GDP – the ceiling mandated by the European Union. The opposition has said it will petition the Constitutional Court to strike down some ‌provisions ‌of the bill.