In this week’s Business News: rating agency boosts credit risk outlook; top end tourism outperforms in second quarter; lower grain harvest predicted; ČEZ faces Slovak nuclear headache; and North Korea offers innovative cure for debt problem.
One of the world’s major credit ratings agencies, Standard & Poor’s, has upped its evaluation of the Czech Republic’s financial outlook. The agency improved its outlook for the country to ‘positive’ from ‘stable’ citing the perceived determination of the new coalition government to get to grips with the mounting debt burden. The move means the agency believes there is a more than one in three chance that it will upgrade the Czech Republic’s overall debt risk rating over the next two years. The step had a swift impact by cutting the cost of state borrowing through bond issues.
The Czech tourism sector notched up mixed results for the three months ending in June. The total of overnight stays was almost 1.0 percent down compared with a year earlier but the number of guests was slightly up thanks to increases in foreign visitors. The top and bottom ends of the market experienced contrasting fortunes. Stays in camps plunged by almost a third, with occupancy at tourist chalets also down almost 17 percent. But occupancy rates at four and five star hotels were around 16 percent up on a year earlier and they were around 54 percent full. The state statistics office said the results could have been even better if international flights had not been disrupted in May and June by an Icelandic volcano.
Czech farmers look like they will not be able to cash in significantly on higher prices for cereals following fears of shortages caused by depleted stocks and Russia’s temporary ban on exports. Estimates for this year’s Czech grain harvest have been cut by around half a million tonnes or around 8.0 percent compared with 2009. It is now expected to reach around 6.4 million tonnes. The forecast fall stems from a drop in the amount of land sown and lower yield for most crops caused by changeable weather which delayed some harvesting.
Czech power giant ČEZ looks set to have problems over a key project to build a new nuclear reactor in Slovakia in partnership with the government. The new right of centre Slovak coalition says it will not directly or indirectly finance the construction of the new reactor or provide any guarantees for loans that might be taken out to pay for the work. It nonetheless wants to conserve its 51 percent stake in the joint venture company already created to prepare and push ahead with construction. The declaration puts the ball in ČEZ’s court about how and whether the major investment can proceed.
Czech Finance Ministry officials are getting to the root of impoverished North Korea’s outstanding debt to the country. North Korea has suggested it repay part of its 10 million US dollar debt for trams and machinery exported during the Communist era by deliveries of ginseng, the root used as a stimulant, cure for arthritis and male aphrodisiac. North Korea is one of the world’s top producers of the prized commodity. One problem though is that the initial North Korean offer reportedly totals around 20 million tonnes, around 13 times Czech annual consumption. Czech officials have suggested deliveries of other commodities, such as zinc, could be used to help resolve the debt problem.
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