FinMin Alena Schillerova (ANO) plans a total of CZK25bn spending cuts in 2020, according to her draft proposal, which was obtained by the state radio channel. The plan includes a 10% cut in the number of civil servants, as well as a considerable reduction of ministries’ expenses, the latter expected to fall by CZK22.5bn. The planned cuts, if approved, will very probably affect capital spending considerably, given that some ministries, like the regional development of environment one, will see a drop of spending by 38-44%. The transport ministry will be also heavily affected, as well as the agriculture one, both to see a spending decline by around 20%. The labor ministry is the only one that will see an increase in spending from original projections, up by 2.3%, which will probably accommodate for some additional social measures.
The proposal is only a working one as Schillerova told the state TV channel on Sunday. It will be on the agenda of a ruling coalition meeting the week after next, on Mar 18. The delay is due mostly to the absence of PM Andrej Babis, who is flying to the United States for an official visit with the US President Donald Trump later this week. Babis hasn’t supported all of Schillerova’s ideas so far, but he seems to be agreeing with the proposed civil servants’ cut. Still, Babis has been usually maneuvering a lot during such conflicts, so Schillerova might not get a lot of support for her ideas. We remind that Schillerova came forward with spending cuts because she is concerned that tax revenues will decrease visibly over the next couple of years due to slower economic activity. She said she couldn’t guarantee that the state budget could end up at a deficit at CZK 0bn in 2020 and it could reach as much as CZK90bn in case of no policy change.