(Bloomberg) -- The Czech Republic, home to the European Union’s tightest fiscal policy, must significantly increase state spending on infrastructure projects, billionaire Andrej Babis said, after pledges of budgetary prudence helped his party win October elections.
The second-richest Czech, who will be named prime minister on Wednesday, has repeatedly highlighted his achievements in cutting the public deficit and debt when he served as the finance minister in the outgoing administration. Having promised to run the state like a business, he criticized what he said were overly complicated procedures required for projects like building highways, railroads, sports facilities and homes for the elderly.
“These are the things that we need to solve and invest into, and this is the role of the state, to invest and cut the bureaucracy," Babis said at an exporters conference in Prague on Tuesday.
The tycoon, who controls a chemicals, food and media empire, has assembled a minority government and is seeking support in a fragmented parliament to make good on his election pledges. Babis has yet to present a specific government platform after he also promised to cut taxes for lower earners and save money by improving state operations. He has said he will allow a budget shortfall only if it’s caused by investment.
Read more about Babis’s efforts to create government
The Czech Republic has undershot its deficit targets in the past few years, partly because the governments and municipalities have held back spending on infrastructure plans. The European Commission forecasts the country’s broader fiscal surplus to widen to 1.2 percent of economic output this year, from 0.7 percent in 2016, which would be the largest positive balance in the 28-member bloc.
The central state budget, which showed an unexpected surplus of 60 billion koruna last year ($2.8 billion), had a deficit of 11.6 billion koruna in the first 11 months of 2017, compared with a full-year target of a 60 billion-koruna shortfall.
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