What's in store for new finance minister?

17-04-2001

The Czech Republic has a new finance minister, the third in less than three years. Several urgent tasks lie ahead of him, including painful public expenditure reform. But what can the new minister really achieve, a year before general elections? More from Vladimir Tax.

Jiri Rusnok officially joined the cabinet on Tuesday morning, just a week after his predecessor, Pavel Mertlik, resigned, to the great surprise of politicians and observers alike. Mr Mertlik cited a serious lack of support from the Prime Minister and difference of opinion with other ministers as the main reasons for his resignation.

Mr Rusnok is now facing the challenges that his predecessor left behind. First among them is privatisation of the remaining state- owned enterprises, a priority task as the government badly needs revenue from privatisation to patch up the holes in the state budget.

However, from a long-term perspective, the yawning gap in public finances requires the government to completely reform state budget expenditure. Mr Mertlik had started work on this task, but gave up due to opposition from his fellow cabinet ministers. An important part of the reforms is renovating the Czech pension system. Considering Mr Rusnok until now worked as the deputy labour and social affairs minister, he is likely to find a common approach with his former boss, Labour Minister Vladimir Spidla. On the other hand, no far-reaching changes can be expected given Mr Spidla's relatively strong socialist views.

Mr Rusnok, like his predecessor, had spoke of the necessity of raising taxes, although the Social Democratic government pledged not to.

With the prospect of general elections in just over a year's time, the minority ruling party is highly unlikely to risk any unpopular steps. Instead, the new finance minister will probably face the challenge of forcing austerity measures over the generous spending ambitions of other ministers. Jiri Rusnok will certainly be hoping for more luck than his predecessor.

17-04-2001