The Czech government has nearly exhausted its budget reserve of 7.88 billion crowns for the year, with little remaining just three months into 2025.
This comes despite lessons from last September’s floods, where the depleted reserve left the government without sufficient funds for emergency response. However, the government has admitted that it underestimated the costs associated with renewable energy initiatives, leading to an urgent withdrawal of 6 billion crowns from the reserve. An additional 14 billion crowns must be allocated from other sources to cover the growing expenses.
The Ministry of Finance has declined to disclose the remaining balance in the budget reserve, nor has it confirmed reports that another 900 million crowns may have already been allocated for housing affordability measures. If true, this would leave less than a billion crowns in the reserve.
“Using the budget reserve to promote renewable energy sources is neither reasonable nor responsible. The budget reserve is intended for unforeseen expenses. However, in this case, it is very difficult to talk about unforeseen expenses,” said Vit Gradil, the chief economist at Cyrrus.
“Moreover, this specific issue with the budget this year was discussed multiple times during its approval and, therefore, was foreseeable,” he added.
The state is set to spend a total of 28.57 billion crowns this year on operational support for renewable energy, 20 billion crowns above the originally approved budget. Critics of this year’s state budget had previously warned about the risk of overspending, with the government now tapping into its reserve and unspent funds from prior years to cover the additional costs.
