State budget for 2005 approved

16-12-2004

The Lower House of Parliament on Wednesday approved the state budget for 2005. It envisages a deficit of over 80 billion Czech crowns (2,700 million euros), a figure which just falls short of the EU requirement that the gap in spending should not exceed 3% of GDP.

The Finance Minister Bohuslav Sobotka, photo: CTKThe Finance Minister Bohuslav Sobotka, photo: CTK However, the governing coalition - which approved the budget unanimously - claims that this is the best it can do under the circumstances. Daniela Lazarova has been following the story - so, Daniela is the budget deficit the main problem?

Well, not if you listen to what some economists are saying. Although the gap is still fairly high, I think the main problem is in how the money is being spent. The opposition right wing Civic Democrats claim that this distribution of funds will not boost economic growth and that - even as it drags the country deeper into debt - it will take more money out of taxpayers' pockets. It is true that after years of very high deficits in public spending -it is difficult - politically - to push through effective cuts. Without reforms to the health and pension systems, which the government has so far been unable to push through, even the opposition acknowledges that the government's hands are to some extent tied.

The main opposition party - the Civic Democrats - claim that the government is merely "treading water". Was there no attempt on their part to try and bring down the government over this crucial vote?

Well, the governing coalition has a slim majority in the Lower House -and they used all of their votes to support the budget, so technically it would not have been easy. They could have tried to throw a spanner in the works, since the coalition was strongly divided on spending priorities, but I don't think that was their goal, really. From their point of view the worse the government's performance gets in the coming 18 months the bigger chance of a landslide victory for them in the next elections.

16-12-2004