Prague's budget war: a new chapter of castle and government struggle
The Czech Chamber is due to vote on overriding the President's veto of a fiscal-rules bill on 25 August. Not just defence spending is at stake, but the next presidential election, where the President is increasingly viewed by the Czech public as the head of the opposition.
President Petr Pavel has vetoed a government bill that would loosen Czechia's fiscal rules, his first veto of the Babiš cabinet, issued on 22 July. The bill would extend the existing defence-spending exemption from 2033 to 2036, add a new exemption for infrastructure spending, and let the government exceed the approved budget by up to 10% during a war, a declared state of threat, or a Security Council of the State finding of serious security deterioration, alongside a broader loosening of the Budgetary Responsibility Act's deficit-control mechanism. The Chamber of Deputies passed the combined bill on 15 May; the opposition-controlled Senate amended it the following month; the Chamber overrode those amendments in early July and sent its original text to Pavel. The Chamber is due to vote on overriding his veto on 25 August.
Two objections, two different provisions
Pavel's veto rests on two grounds. The first concerns the bill's ordinary-course provisions, the ones covering routine annual budgeting, no emergency required. "This law allows the government to borrow significantly more than it can today," he said, warning of long-term risk to public-finance sustainability. Finance Minister Alena Schillerová called the loosening essential: without it, she said, next year's deficit would be capped at CZK 150 billion under current rules, which would "lead to the devastation of the economy and defence capability." Babiš was blunter still: "We need to change the law so the deficit can be higher than 150 billion, otherwise we can never put a budget together and we will paralyse the whole country," he said, separately indicating the government's own working plan is for a deficit of CZK 300–400 billion in 2027.
Pavel's second objection targets the bill's emergency clause specifically: it lets the government exceed its own budget by up to 10% "based on a decision of only its own advisory security body" — the Security Council of the State, composed of the prime minister and cabinet ministers — without the Chamber's consent. Critics, including the National Budget Council, called the "significantly deteriorated security situation" trigger too vague. Schillerová rejected that, calling the mechanism "a necessary condition for a flexible response to security threats," and noting that Pavel, as supreme commander of the armed forces, should understand that.
Babiš: Pavel is "leader of the opposition"
The prime minister called the veto “purely political”, and “absolutely irresponsible”, accusing Pavel of a double standard for not vetoing the previous Fiala government's budget despite its own breaches. "He is of course the leader of the opposition," Babiš said of Pavel. Pavel, for his part, has drawn a sharp line between the two documents he's dealt with differently: "I see a fundamental difference between a law that sets the rules for drawing up the budget, and the budget itself. I have never vetoed any budget, even though I had a number of objections to those budgets."
Kalousek and Zeman: a split among critics
Former finance minister Miroslav Kalousek backed Pavel's reasoning in full — "I agree with all the reasons for the presidential veto; that bill is truly appalling" — but faulted his consistency: Pavel signed the 2026 budget despite its own conflict with the same fiscal-responsibility rules, "paradoxically now prolonging, with his veto, an unlawful state of affairs for which he took on his share of responsibility." Former president Miloš Zeman took the opposite position: he said he would have signed the very bill Pavel vetoed but would not have signed the 2026 state budget itself, which is a rare voice partly agreeing with Pavel on the veto while criticising the government on a separate front.
A proxy fight before 2028?
Beyond the fiscal mechanics, the dispute is increasingly read — including in one Aktuálně.cz analysis — as an early skirmish ahead of Czechia's next presidential election, roughly a year and a half away. Trust in Pavel has stayed above 50% since his election, per STEM polling, extending into a meaningful share of coalition voters, and a separate NMS survey found the public naming Pavel — not any parliamentary opposition figure — as the country's most prominent opposition politician. Not all commentary favours Pavel, though: on Deník N's podcast Vrtěti psem, Czech Television reporter Petr Vašek suggested the president may have boxed himself in, if he later signs a considerably larger 2027 budget, "I don't know if his voters would understand that. Petr Pavel may have made a rod for his own back."
