The Czech Finance Ministry has proposed a state budget for 2025 with a deficit of CZK 230 billion, published on the ministry website yesterday. This is a further reduction of the deficit, which is projected at CZK 252 billion for this year, down from CZK 288.5 billion in 2023.
In 2025, budget revenues are to rise by 7.5% to CZK 2,086 billion, and spending will rise by 5.7% to CZK 2,316 billion.
The draft envisages increased spending in most budget chapters. The largest percentage increase is expected to be in the Health Ministry, where spending will rise by 52.9% to CZK 17.5 billion, followed by the Transport Ministry with a 34.5% increase to CZK 139.4 billion. On the other hand, the biggest drop in spending is expected at the Ministry of Regional Development, decreasing by 12.9% to CZK 13.3 billion, and the Industry and Trade Ministry, by 9.8% to CZK 35.8 billion.
Finance Minister Zbynek Stanjura (ODS) described the draft budget as pro-growth, saying the government is borrowing mainly for investments.
“It brings record investment, and much more than what previous governments invested in times of higher economic growth. But at the same time, the proposal takes into account the government’s efforts to consolidate public finances,” Stanjura said.
Capital expenditure in the draft budget amounts to CZK 250.8 billion, up from CZK 184.6 billion in this year’s budget. According to the Finance Ministry, the state’s investments will be directed mainly to transport infrastructure, with the Transport Ministry’s capital expenditure planned at CZK 91.5 billion, an increase of CZK 49.2 billion year-on-year.
“What is important is that already in this initial version of the budget we are reaching a similar record level of funding for investments in transport infrastructure, within the State Fund for Transport Infrastructure (SFDI) and within the entire transport chapter,” Transport Minister Martin Kupka (ODS) told CTK on Saturday. He said further discussions will continue on other transport funds.
The main source of revenue, according to the Finance Ministry, will be social security insurance contributions of CZK 809.4 billion. The ministry expects to receive CZK 414 billion in value-added tax, an increase of 7%. Corporate tax revenues are expected to reach CZK 244.3 billion, up 13.5% from this year. Individuals’ income tax is expected to bring in CZK 184.7 billion, up 18.8% year-on-year.
The draft budget also includes revenues from the European Union worth CZK 153.6 billion, and contributions to the European budget worth CZK 65.3 billion.
The ministry proposes to finance the budget deficit by increasing the state debt by CZK 237.4 billion, and by increasing the balance of state financial assets by CZK 7.4 billion. The cost of servicing the state debt is expected to increase by 5.3%, to CZK 100 billion.
The Finance Ministry had to submit the draft state budget to the government by the end of August. The cabinet has to discuss the draft and submit it to the Chamber of Deputies by the end of September. The cabinet can still change the parameters of the budget, but Stanjura warned in August that under current budget rules, the deficit cannot exceed CZK 231 billion.
