(Bloomberg) -- The Czech Social Democrats clashed with billionaire Prime Minister Andrej Babis over next year’s state budget, increasing tension inside a coalition that’s teetering on the verge of a breakup.
The junior government member demanded about 20 billion koruna ($869 million) in spending on top of the proposal by the Finance Ministry, which Babis’s ANO party controls. The Social Democrats said they won’t back the budget bill unless it earmarks additional money for the police, firefighters, social services and other areas.
“We want to make good on the promises that our coalition government gave to our citizens,” Social Democrat leader and Interior Minister Jan Hamacek said Wednesday. “The current budget proposal doesn’t make that possible.”
He mentioned a new tax on bank assets among potential ways to fund the additional expenditure without breaching the 40 billion-koruna deficit target.
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The demands, which Babis rejected as irresponsible, are further straining the minority coalition after police recommended charging the premier with fraud and the preliminary result of a European Union probe found him in potential conflict of interest. Babis denies any wrongdoing and rejects those accusations as a plot by rivals designed to remove him from power.
Earlier this month, the Social Democrats threatened to leave the government if President Milos Zeman keeps refusing to appoint their nominees as culture minister.
The clash over budget comes after several years of economic boom and extraordinary tax revenue allowed the two-party administration to increase pensions, public-sector wages, and infrastructure investment.
The spending spree has tipped the state budget into a moderate deficit, and a nascent economic slowdown threatens to limit the room for more expenditure. Still, at 33% of gross domestic product, the country’s public debt is the fourth lowest in the EU.
“We’re watching the state budget being torpedoed before our eyes,” Finance Minister Alena Schillerova said in a statement. “Such a dramatic increase in spending at the expense of future generations would be not only irresponsible, but also outright wasteful.”
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