The Czech budget may face a revenue shortfall of 50 billion crowns ($2.35 billion) this year due to rules governing the use of money from the EU's Modernisation Fund, Environment Minister Petr Hladik was quoted as saying on Friday.

The government had earmarked 50 billion crowns of financing from the fund for the Environment Ministry in this year's budget, but this money cannot be drawn unless used for concrete projects for energy transition or modernisation of carbon-dependent regions, news website www.denikn.cz quoted Hladik as saying in an interview.

While government revenue for the year would be up to 50 billion crowns lower than planned, the money would stay in the fund and not be lost, Hladik said.

The government plans a 295 billion crown full-year budget deficit and without other adjustments, the loss of the funds could increase that to as much 345 billion crowns.

The budget deficit hit 200 billion at the end of April, a record shortfall in that period, already raising doubts whether the full-year target would be met.

Hladik said that at least some of the Modernisation Fund money penned in could be used for projects currently funded from other parts of the budget, which would compensate for some of the lost revenue.

"We will lead a debate with the finance and industry ministries on what we can fund from the state budget and what from the Modernisation Fund," he said.

He said the revenue from the Modernisation Fund was earmarked for the 2023 budget last year at the height of Europe's energy crisis when the government - which Hladik only joined this year - believed exceptions to funding rules would allow the use of the money.

Denik N quoted the finance ministry saying it was in discussions with other ministries to resolve the issue. ($1 = 21.2420 Czech crowns) (Reporting by Jan Lopatka; Editing by Conor Humphries)