The Czech Republic's lower house of parliament approved legislation on Wednesday to relax national budget deficit rules, overriding a presidential veto to grant the government greater spending flexibility.
The measure, initially passed by the lower house in May, permits the government to increase spending by up to 10% in response to vaguely defined security threats. Defense spending exceeding 2% of gross domestic product will remain excluded from deficit calculations under the new law.
The legislation also exempts multiple infrastructure projects from deficit calculations, including road, rail, nuclear power plant, and dam developments. President Petr Pavel, opposition lawmakers, and the national budget watchdog opposed the law, citing risks to long-term fiscal sustainability and concerns that it expands the government's ability to raise spending without requiring parliamentary approval.
Prime Minister Andrej Babis, leading a eurosceptic populist party, supported the measure, which was approved by the lower house despite the veto override. The Senate had previously approved the legislation, which now awaits implementation following the lower house's final vote.
