The state budget for this year was approved with a deficit of 241 billion crowns. This includes an additional ten billion added to the original proposal due to the floods that struck, in September last year, parts of the Olomouc and Moravian-Silesian regions.

This year, however, questions are again arising as to whether the approved budget deficit will be met. All the more so since the National Budget Council, in the autumn of last year after the government submitted the budget proposal to the Chamber of Deputies, warned of risks that the proposed budget carried for this year. So far, it appears that several of these risks are materializing—or could still materialize before the end of the year.

At the same time, the current development of the state budget as of the end of July 2025 shows that public finances are in better condition than in the same period last year. The state has so far run a deficit of just under 166 billion crowns (excluding the impact of EU-related revenues and expenditures), which is about 40 billion crowns better than last year.

It is therefore possible that, despite the mentioned risks, the approved full-year deficit will be met. This is partly because we have now entered the part of the year that tends to be more favorable for budget performance. In addition, the Czech economy is performing relatively well (its growth accelerated in the second quarter), which means several billion crowns more in revenues for the state budget compared to the original plan.

From this perspective, it may be a certain disadvantage for the outgoing government of Petr Fiala that the elections to the Chamber of Deputies will take place before it is definitively clear how this budget will turn out.

This will make the drafting of the state budget proposal for 2026 all the more difficult. In essence, it may no longer be the government’s own budget (if pre-election polls are confirmed and the current opposition parties win the election), so it might not matter how it is drafted. On the other hand, it could send a final signal before the elections that fiscal responsibility still matters to the cabinet. The question, however, is whether voters are still willing to listen to the topic of fiscal responsibility enough for it to be a decisive factor in their choice of whom to support.

For this reason, it will be interesting to watch how the new cabinet, which will have to discuss the proposal by the end of September (i.e., before the elections), will approach it. Whether it will adopt the budget as its own, or reject it and decide to propose an entirely new budget. If the latter occurs, the likelihood will increase that the Czech Republic will enter 2026 under a provisional budget, similar to what happened in 2022. In any case, drafting and approving a responsible state budget for 2026 will be a rather challenging task for any government that emerges from the October parliamentary elections.