Czech FinMin Schillerova pushes for lower personnel spending in 2020

Finance Minister Alena Schillerova (ANO) is pushing for lower personnel spending in 2020, she told the state radio channel. She said that after excluding positions in education and the security sector, there were about 7,000 unfilled positions, which could allow notable budget savings. Schillerova also insists that all ministers should provide plans for spending cuts, despite already mounting resistance, including from her fellow ANO ministers. Schillerova has already had a clash with health minister Adam Vojtech (on ANO’s quota, though not a party member) about her idea that the government could end health insurance coverage for children, pensioners, unemployed and disable, instead increasing the overall health insurance burden. It appears that this idea is not going to fly, judging from speculations in the local press and the not very favorable reaction of PM Andrej Babis. However, Schillerova’s push for savings elsewhere has a far greater chance of success, with which Babis agrees.

According to the state TV channel, Schillerova is already bypassing her fellow cabinet members in trying to find a way to reduce spending in 2020, when economic activity is expected to slow down even further. There are no details yet, but it appears that after meeting resistance from a lot of ministries (like environment, transport, regional development, defense), Schillerova doesn’t have a lot of options left. It remains to be seen whether capital spending will be left intact, which is generally one of the easiest to cut down. If that happens, however, we see a real threat of the government suddenly acting very pro-cyclically at a time when the economy slowdown might be worsened by external factors, like a disorderly Brexit and international trade barriers. To be fair, a decline in demand might not be the worst thing to happen right now, especially given how overheated the labor market is, but moving the economy close to recession is never a good idea, in our opinion.

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