Czech Prime Minister Petr Fiala pledged to keep cutting record pandemic-era budget deficits even if it hurts the government’s popularity, after lawmakers approved a contentious bill to slow pension growth.
(Bloomberg) —
Czech Prime Minister Petr Fiala pledged to keep cutting record pandemic-era budget deficits even if it hurts the government’s popularity, after lawmakers approved a contentious bill to slow pension growth.
“We must push ahead with fiscal consolidation,” the 58-year-old leader said in a live interview on the public television on Sunday.
His comments came a day after the lower chamber of parliament overcame obstructions by the opposition and voted to change how retirement benefits are automatically raised to account for inflation. The bill, which now requires a review by the Senate and the president, will save the state about 53 billion koruna ($2.4 billion) in total this year and next if it becomes law by March 22.
Opposition leaders have threatened to challenge the amendment in court, and former Prime Minister Andrej Babis plans to organize protest rallies by seniors.
Fiala’s five-party coalition is trying to deliver on its key election promise of budgetary restraint after the energy crisis forced it to roll out aid to people and companies and surging consumer prices triggered an automatic 17% jump in pensions last year. Elected in 2021, the center-right government also seeks to cut borrowing in the longer term, including a plan to gradually raise the retirement age.
“We are prepared for consequences, including a potential drop of popularity,” Fiala said.
Without the pension amendment, the five-party coalition risked exceeding its deficit target of 295 billion koruna, after the shortfall in just the first two months of the year swelled to 120 billion koruna.
While the government has imposed a temporary levy on windfall profits in the energy and banking industries, Fiala refuses to raise income taxes. His administration has also preserved a tax cut adopted by the previous cabinet, which mostly benefits top earners and costs some 100 billion koruna per year.
Speaking at a labor-union conference earlier last week, the premier called on workers to moderate their wage demands to help damp the worst inflation in three decades. He reiterated his government’s goal to cut the public-finance gap, a broader measure of fiscal health, to within 3% of gross domestic product “as soon as possible” from the expected 4.2% this year.
Read More:
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