The Fiscal Forecast is based on the macroeconomic forecast issued by the Ministry of Finance in April 2026. This expects a 2.1% increase in economic activity this year, driven mainly by domestic demand. In 2027, the economy could grow by 2.4% thanks to an acceleration in economic growth in the countries of the main trading partners. The average inflation rate could reach 2.5% this year and rise slightly to 2.8% in 2027. Inflationary pressures this year will be dampened not only by the transfer of funding for the levy on supported energy sources to the state, but also by a stronger koruna and last year’s fall in global agricultural commodity prices. The earlier monetary policy stance should also continue to have a restrictive effect. Conversely, the expected inflationary factors include, in particular, higher oil, gas and electricity prices as a result of the conflict in the Middle East, and the continuing strong price growth in residential property. Imbalances linked to labour shortages continue to be evident in the labour market, though these are tempered by the slowdown in industrial production. The annual average unemployment rate is expected to remain below 3% and could fall slightly in the coming years as the economic recovery continues.

The general government sector budget balance in 2025 ended with a deficit of 2.1% of GDP. The deficit thus remained virtually at the same level as a year earlier, or rather there was a slight increase of 0.1 percentage point. The structural balance, by contrast, deteriorated by 0.5 percentage points to −2.2% of GDP. The Czech Republic thus meets the Stability and Growth Pact’s reference value for the general government deficit of 3% of GDP. At the same time, the national fiscal rule, which under the law permitted a structural deficit of up to 2.25% of GDP, was also met last year. However, the year-on-year trend suggests a reversal of the favourable development seen the year before last. For this year, we expect a public finance deficit of around 2.6% of GDP, or 2.4% of GDP after taking into account the effects of the economic cycle and one-off or other temporary measures.

Developments in the coming period will depend on the parameters of the new Fiscal-Structural Plan, which is currently being prepared. The basic premise should be greater fiscal space for investment in infrastructure and security, with a subsequent reduction in public finance deficits. The draft amendment to the Act on Budgetary Rules allows for an increase in defence and infrastructure expenditure in accordance with the Linear Infrastructure Act (Chamber of Deputies Print No. 90). Higher defence expenditure is also recognised in most European Union countries, as they have an exemption under European rules in the form of an escape clause. However, public finances should generally remain below the general government deficit level of 3% of GDP, as envisaged in both the Policy Statement of the Government and the Economic Strategy approved by the Government.

Measures to support more efficient tax collection and increase efficiency in spending should help to achieve the public finance targets. Reducing the operating expenditure of public institutions, reintroducing electronic sales records, or implementing the Kobra 26 antitax-fraud system and other measures should contribute to this.
General government debt rose by 1 percentage point to 44.3% of GDP in 2025, and we estimate a gradual increase to around 50% of GDP in the following years. We expect that, in addition to the public finance deficit, the debt ratio will also be influenced by the loan that the state will provide in connection with the construction of new nuclear power sources at Dukovany Powerhouse.