Mindful that many voters have defected in the polls from the ruling Social Democrats to the senior opposition Civic Democrats, Cabinet ministers at their July 13 meeting raised no objections to a 76.4 billion Kč ($3.1 billion) budget deficit that includes spending 6 billion Kč over the limit set by the European Commission (EC).

Cabinet ministers failed to come to final terms for the 2006 state budget during the debate, and will continue discussing it the rest of the month. Most ministers requested more money for their offices, contributing to the imbalance between proposed state spending of 906.6 billion Kč and revenues projected at 830.2 billion Kč.

The largest slice of the budget pie, 261 billion Kč, would go to state pensions, an increase of 15.5 billion Kč over this year. The government also intends to increase the funds used to pay out sickness benefits. The Social Democrats, now trailing in the polls, hope that such generous state subsidies will help win back voter support before the election next summer.

The EC has set spending and deficit limits for EU member states planning to adopt the euro in the near future. The Czech Republic has already said it intends to join the euro zone by 2010.

However, Finance Ministry spokesman Radek Němeček said the expenditures exceed the EU limit only slightly.

"There's no risk of a negative reaction from the side of the European Commission," Němeček said.

Finance Minister Bohuslav Sobotka said last month that the Czech Republic must cut expenditures by about 30 billion Kč next year to honor its commitments to Brussels and adopt the euro by 2010.

Last year the country became the first in the region to fulfill the Maastricht Treaty's single-currency requirements for adopting the euro. Under the Maastricht criteria, a country hoping to adopt the euro must operate with a deficit below 3.8 percent of its gross domestic product (GDP), and its annual inflation must remain under 3.1 percent. In addition, public finance debt must stay below 60 percent of GDP.

The 2006 budget draft anticipates economic growth of 4.1 percent next year, and average annual inflation of 2.2 percent. Meanwhile, the overall public finance debt is not expected to exceed 40 percent of GDP.

Despite ignoring the EC limit for 2006 spending, however, the government would still keep its overall deficit under the limit of 3.8 percent of GDP, Němeček said.

But while critics accused the government of allowing politics to overshadow its European obligations, Sobotka touted a growth spurt in the Czech economy that has made increased expenditures possible. He noted that the spending increase comes at a time when the nation enjoys far more favorable state finances than had been expected, including a 3.8 billion Kč surplus in the first half of the year.

However, Sobotka said, sticking to the "convergence program" leading to the country's adoption of the euro remains a key objective for the Finance Ministry.

"The goal I have set for myself is to have a budget that will enable us to stick to [the convergence program] even in the year of the general elections in 2006," Sobotka said.