Thursday, 1 October 2026
Czechia’s public finances moved back into deficit in the second quarter of 2026, with the shortfall reaching CZK 33.3 billion as expenditure grew almost twice as quickly as government revenue. The deficit was equivalent to 1.5% of GDP, while public debt stood at CZK 3.84 trillion, or 43.8% of GDP.
The result represents a clear deterioration from the same period last year, when the public sector recorded a CZK 9.4 billion surplus. Central government accounted for most of the change, posting a CZK 107.1 billion deficit, CZK 74.7 billion deeper than in the second quarter of 2025.
Local government finances were considerably stronger. Municipalities and other local authorities produced a combined CZK 60.7 billion surplus, improving by CZK 19.6 billion year-on-year. Health insurance funds also remained in positive territory, reporting a surplus of CZK 13.1 billion.
Public revenue increased by 4.8% from a year earlier and represented 43.1% of GDP, supported particularly by an additional CZK 32.9 billion in social contributions. Government expenditure rose more rapidly, increasing by 9.5% and reaching 44.6% of GDP.
Investment was among the areas contributing to the increase in spending. Government fixed-capital expenditure rose by CZK 17.8 billion compared with the previous year. Social payments increased by CZK 27.5 billion, while spending on public-sector employees was CZK 19.2 billion higher.
The nominal public debt increased by CZK 215.1 billion over the year to CZK 3.842 trillion. However, economic growth largely absorbed the effect on the debt ratio, which edged up only slightly from 43.7% to 43.8% of GDP. Compared with the first quarter, the debt ratio actually declined by 0.3 percentage points. The Czech Statistical Office had reported a ratio of 44.1% for the first quarter.
Separate national accounts data show that the Czech economy expanded by 1.9% year-on-year in the second quarter, while total fixed investment increased by 7.1%. Investment in housing, other buildings and infrastructure was among the areas contributing to that growth.
For the property and construction sectors, the combination of higher public capital expenditure and strong local-government finances is significant. It indicates continued capacity for infrastructure and public development spending, even as the wider fiscal position becomes more constrained and central government faces greater pressure to balance investment priorities against rising recurrent expenditure.
