This week in business: Lower house approves next year’s budget; The crown hits a four-year low; Economic confidence went up in December for the fifth consecutive month; Businessmen Daniel Křetínský plans to buy the Axel Springer Ringier publishing group; Ostrava-based company Technoexport has won a contract to modernize two oil refineries in Iraq; Czech trams set to begin operating in Washington DC next year.
The lower house of parliament has approved next year’s budget with a deficit of 112 billion crowns. The budget was put together with expected revenues of 1.099 trillion crowns, and spending of 1.2 trillion. The outgoing interim government, which drafted the budget, relied on a 1.3 percent economic growth next year. The budget won backing from MPs of the emerging centre-left coalition but parties of the previous government – the Civic Democrats and TOP 09 – criticized it over alleged excessive spending which they say will increase its deficit as well as the overall public debt.
The Czech crown fell against the euro on Tuesday to 27.7, which is the lowest exchange rate since March 2009. By Thursday, it was up to 27.65 crowns to the euro. The weakening of the crown has been fuelled by monetary interventions which the Czech National Bank launched in November in order to avoid deflation. The crown is currently stagnating against the dollar. The central bank said it would keep the exchange rate against the euro at around 27 crowns until at least the start of 2015.
Overall confidence in the Czech economy grew in December, for the fifth month in a row, according to figures released by the Czech Statistics Office this week. Confidence grew among business owners and in certain parts of the service sector; in the industry sector and among consumers, economic confidence stayed on approximately the same level from the previous month although consumer confidence has improved in a year-on-year comparison.
Czech businessmen Daniel Křetínský and Patrik Tkáč are in talks to purchase the Ringier Axel Springer CZ group which publishes the country’s best-selling daily, the tabloid Blesk as well as other titles including Aha!, weekly magazine Reflex and others. The group, which is a joint venture of the German company Axel Springer and the Swiss publisher Ringier, holds around 36-percent share of the Czech print media market. Last year, Ringier Axel Springer CZ, which has been on sale for some time now, posted a net profit of 422 million crowns with a turnover of over 2 billion. Daniel Křetínský is a co-owner of the EPH energy holding, and owns the Sparta Prague football club.
The Czech company Technoexport, part of the Safichem Group, has won a 250-million dollar contract to modernize two oil refineries for a state-owned company in Iraq. Technoexport owner Tomáš Plachý said on Thursday the deal had been approved by the Iraqi Ministry of Oil. This is the biggest single contract in the Czech company’s history, and the second largest contract signed by any Czech company in post-war Iraq. A number of other Czech companies will be subcontracted for the modernization.
Czech-made trams, produced by the Ostrava-based company Inekon Group, this week successfully tested in Washington DC. The first three vehicles will run on a new, 3.8-kilometer long line in the US capital, with local authorities hoping the line will open in the first quarter of next year. The trams for Washington are part of 24-million dollar deal to deliver trams to Portland, Oregon, Seattle and the capital which Inekon Group signed in 2004. Czech trams are already operating in the two west-coast cities. Tram transport will be returning to the streets of Washington DC after a 50-year absence.
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