Czech President vetoes budget bill, PM calls it 'irresponsible'

Czech President Petr Pavel has vetoed a bill aimed at easing budget responsibility rules, marking his first such action against legislation proposed by Prime Minister Andrej Babiš's government. Pavel cited concerns over the long-term sustainability of public finances and the potential weakening of parliamentary oversight in favor of the government.

The legislation, which lawmakers had previously approved after it was returned by the Senate, sought to relax rules for state budget formation. Specifically, it proposed excluding strategic infrastructure projects and defense spending exceeding 2% of GDP from maximum expenditure limits. It also allowed for a potential 10% increase in overall expenditures during deteriorating security situations.

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This law allows the government to borrow significantly more than today. In practice, this means the government will gain more room to finance expenditures through debt. The state could thus borrow for some expenditures without any financial limit over ten years (2026 to 2036), while our debt is already growing at a rate that we cannot finance long-term.

President Pavel voiced strong criticism of these changes. "This law allows the government to borrow significantly more than today," he stated in a social media video. "In practice, this means the government will gain more room to finance expenditures through debt. The state could thus borrow for some expenditures without any financial limit over ten years (2026 to 2036), while our debt is already growing at a rate that we cannot finance long-term."

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He is jeopardizing Czech healthcare, our country's defense capability, school construction, the safety of our fellow citizens, and the construction of energy sources... We will do everything to override this irresponsible, ill-considered, activist veto.

Prime Minister Babiš reacted sharply to the veto, calling it "irresponsible" towards Czech citizens. "He is jeopardizing Czech healthcare, our country's defense capability, school construction, the safety of our fellow citizens, and the construction of energy sources... We will do everything to override this irresponsible, ill-considered, activist veto," the prime minister declared before departing for Serbia.

Finance Minister Alena Schillerová echoed the government's stance, labeling the president's reasoning as "hypocritical opposition rhetoric." She argued that the proposed amendment would restore transparency to the budget, unlike "budgetary tricks and ambiguities" of the previous government, while still supporting economic growth and national defense. Without the law, she noted, next year's deficit could not exceed 150 billion crowns (6.2 billion euros), compared to an expected 310 billion crowns (12.8 billion euros) this year. The bill will now return to the Chamber of Deputies, requiring at least 101 out of 200 votes to be passed a third time. Opposition parties have previously indicated they would appeal to the Constitutional Court if the legislation passed unchanged.

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We promised to end the practice of budgetary tricks and ambiguities by which the previous government artificially improved its deficits. Therefore, we have prepared an amendment that returns transparency to the budget while not harming economic growth and the country's defense capability.