(Bloomberg) -- Czech lawmakers voted to extend one of Europe’s most aggressive fiscal-austerity programs that has already damped economic growth and curbed the government’s popularity a year before elections.
A budget bill approved by parliament on Tuesday cuts the central government’s deficit to 241 billion koruna ($10 billion) in 2025 from this year’s 282 billion-koruna target. The public-finance shortfall, a broader measure of financial health, is projected below the European Union average and at about a half of what it is in Hungary and Poland.
Prime Minister Petr Fiala’s administration is doubling down on its pledge of budget restraint even after it ramped up spending on defense, energy subsidies and relief measures following recent devastating floods.
A string of unpopular spending curbs and tax increases slashed the deficit by an equivalent of $7.5 billion since the administration took power in 2021.
But opinion polls show the four center-right ruling parties could lose power next fall to the opposition led by billionaire and former Prime Minister Andrej Babis, who has pledged to boost the stalling economy with more public spending.
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