Czech State Budget Deficit at 176.6 bn CZK, EU Funds Offset Gap

In July the Czech Republic’s state budget recorded a deficit of 176.6 billion CZK, 8.5 billion CZK higher than a year earlier and the second‑lowest since 2020, though still the sixth‑largest since the country’s founding. Both revenues and expenditures grew 5.4 % year‑on‑year, with EU programme payments adding roughly 30 billion CZK and improving the monthly balance to a 7 billion CZK surplus. After stripping out the EU impact, the underlying deficit stood at 212.4 billion CZK, up 46.4 billion CZK YoY. Tax collection rose 7 % overall, driven by higher personal‑income and corporate‑tax receipts and increased social‑security contributions. Public spending was led by pensions, health, unemployment benefits and defence, while the housing‑benefit scheme alone cost the budget nearly 11 billion CZK in the first half of the year. The government, led by Prime Minister Andrej Babiš and Finance Minister Alena Schillerová, pledged to keep the structural deficit below the EU‑mandated 3 % of GDP, targeting a 2.8 % share by 2026. The European Commission approved the fiscal‑structural plan, confirming it meets EU fiscal‑rule requirements. Public‑sector unions have also called for wage negotiations, urging the cabinet to set a concrete meeting date as the budget for 2027 is being prepared.