PRAGUE (Reuters) - The Czech lower house of parliament approved the 2020 state budget bill in the first of three readings on Wednesday, setting the planned deficit at 40 billion crowns ($1.74 billion).
The central state budget -- the major part of the public sector books - is based on expected revenues of 1.58 trillion crowns and spending of 1.62 trillion crowns.
The bill has to pass two more readings in the lower chamber of parliament, with the final vote expected in December.
The centre-left government lacks a majority in parliament but hopes to pass the budget with the help of the opposition Communist Party, which supported Wednesday's reading.
In order to meet target revenues, the government led by Prime Minister Andrej Babis has to separately win approval to increase taxes.
A 5.7% rise in spending is planned to fund hikes in pensions, public sector salaries and investments.
The opposition has criticized the budget, saying it is wasteful and that savings should be made for the next economic downturn.
As well as benefits from a growing economy and planned hikes in alcohol and tobacco excise taxes, the budget balance should be helped by a one-off 17 billion crown revenue shift of value-added tax rebates from next year into 2021.
The finance ministry expects the overall public sector balance to swing to a deficit of 0.2% of gross domestic product from a 0.3% surplus this year.
The Czech economy has slowed but is still expected to grow 2.2% next year, after 2.4 % this year.