The EC recommends an exception to the rules for 16 countries including the Czech Republic due to defense spending

Brussels/Prague – The European Commission (EC) in the so-called spring package of the European semester recommended that the Council of the European Union activate the so-called national exemption from the Stability and Growth Pact due to increased defense spending for 16 countries, including the Czech Republic. At the same time, it identified the Czech Republic as one of 12 countries whose expenditures are in line with recommendations based on medium-term budget plans and against which no proceedings are being conducted for excessive deficit. In the area of competitiveness, the EC recommends that member states primarily support innovation and reduce dependencies in key sectors.

The so-called national exemption from the pact will be applicable for the first time. According to the Commission, the aim is to enable a transition to a higher level of defense capabilities without jeopardizing financial sustainability. The public finance deficit according to the pact must not exceed three percent of gross domestic product (GDP) and public debt must be 60 percent of GDP or must be reduced.

The Czech Ministry of Finance stated in response to a query from ČTK that it requested the activation of the national escape clause from the Stability and Growth Pact due to changes in domestic budgetary rules. “The law is currently being discussed in the Senate and, if approved, will allow for temporary additional funding for Czech defense. The escape clause from the Stability and Growth Pact is necessary so that the Czech Republic does not violate European fiscal rules,” the ministry stated.

According to the government plan, the Czech Republic should increase defense spending by 0.2 percent of GDP annually in the coming years so that by 2030 it reaches three percent of GDP. According to the amendment to the budgetary rules, the difference between two percent of GDP and the actual amount of defense spending will not be included in the expenditure limits to which the law on budgetary responsibility binds governments from 2026 to 2033. (June 4)