Cabinet agrees compromise approach on Cesky Telecom sale; Government agrees to reduce public spending and approves plan to help young Czechs buy their own homes; OECD urges faster pension and health reforms; average monthly wage up 7 pct in Q3.
The Cabinet agreed this week on a compromise approach for selling off the Czech state's 51 percent stake in Cesky Telecom: The government will work on both a strategic sale and a stock-market floatation. The tender will be announced this year. If a suitable investor isn't found, the government will sell its stake on the capital markets. Cesky Telecom is worth about 114 billion crowns; it operates three-and-a-half million fixed lines and has another 4.5 million customers through its mobile operator, Eurotel.
The government has agreed on a plan to reduce public spending by 70 billion crowns in the years 2006 and 2007. The planned reduction in public spending is in line with the EU convergence programme and failure to adhere to it could result in steep fines and problems with accessing EU solidarity finds. The money should be saved predominantly on social benefits and in the state sector.
The Czech city of Ostrava lost out to Slovakia's Kosice as the location of a new Ford automotive plant. Slovakia reportedly offered better tax incentives and lower wages. Ford will invest from 300 to 400 million euros into the new Slovak plant, which will make engine parts.
The government has approved a bill to help young people buy their own homes. Under the plan, a home buyer under the age of 36 can borrow the equivalent of some 10,000 euros from the state at a special low interest rate. Local development minister Jiri Paroubek said enough money had been earmarked 1,000 loans this year and that next year some 5,000 loans would be available.
The Organization for Economic Cooperation and Development has called on the Czech Republic to speed up pension and health care reforms. In a report on the state of the economy published this week, the OECD warned that the objective of achieving a deficit equal to three percent of GDP by 2008, which is a condition for adopting the euro, would not be reached without further measures. The Czech Republic would like to join the euro-zone sometime at the end of the decade.
The average gross monthly wage in the Czech Republic grew more than 7 percent in nominal terms this last quarter and 4.0 percent in real terms. State employees saw their average wage climb to just over 17,000 crowns per month, while private sector workers' salaries grew to reach nearly 18,000 crowns, the equivalent of about 560 euros per month.
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