The Finance Ministry has announced that it is expecting the deficit for this year to reach five percent of the GDP, in comparison to last year’s 3.3 percent, due in large part to the recently approved church property restitution bill and problems with drawing of EU funds this year. In October, the ministry was still counting on an annual deficit of 3.2 percent, but Friday’s fiscal outlook shows a different prognosis.
In Business News this week: MPs debate draft budget for 2013; OECD cuts Czech growth forecast for this and next year; Prague Stock Exchange introduces new trading system; how much would ČEZ’s exit from Albania cost? Car maker Škoda to introduce four new models next year; and the east Bohemian town of Přelouč is ranked as the country’s best place for business.
Fuel prices in the Czech Republic have continued to fall this week, according to figures by the CCS monitoring firm released on Thursday. The price of the most popular petrol, Natural 95, decreased by 0.24 crowns to an average of 35.6 crowns per litre while the average price of diesel dropped by 0.008 crowns to 36.1 crowns per litre. The highest prices have been registered at gas stations in the capital; the lowest were recorded in the Plzeň and Ústí regions. Analysts say the strengthening Czech crown and lower margins are behind the continued drop in fuel prices.
Speaking on Wednesday, Finance Minister Miroslav Kalousek said that a recently approved church restitution bill would have an impact on the budget for this year, even though the state has not yet begun making payments to church organisations. He said that was because under European Union rules the CZK 59 billion would have to be accounted as a one-off outlay this year. Mr. Kalousek said the 2012 budget deficit could therefore reach 5 percent of gross domestic product, rather than the projected 3.5 percent.
The US secretary of state, Hillary Clinton, will make a brief visit to Prague on Monday in order to support a bid by the American company Westinghouse to complete the Temelín nuclear plant, Hospodářské noviny reported. The newspaper quoted a Czech diplomat as saying the US was intensifying its activities with regard to the lucrative contract. France’s Areva was ruled out of the tender by Temelín’s owner CEZ, but the company is fighting that decision in court. The only other name in the running is a consortium made up of Russia’s Atomstrojexport and Gidropress and the Czech firm Škoda JS.
A Czech tourist whose ruined holiday was not refunded by the bankrupt travel agency’s insurance company has demanded compensation from the state. This is the first case of its kind in the Czech Republic. The insurer of Parkam Holidays which went bankrupt last summer refused to refund clients in full for holidays that fell through arguing that the company’s insurance was low. Something similar happened to the clients of BG Travel which also went bankrupt. The Czech tourist who has set a precedent by demanding that the state refund the money is citing poor legislation which sets a low basic insurance limit for travel companies.
A skirmish in the battle over the fate of the right-of-centre government’s extensive programme of reforms reached its final stage on Tuesday. The opposition took a case to the Constitutional Court saying that laws changing the country’s health, social and pension systems had been pushed through in a manner that contravened their rights. In the end, the opposition saw that complaint rejected – but scored a partial success when compulsory work for the jobless was overturned.
President Václav Klaus on Friday re-appointed Mojmír Hampl and Vladimír Tomšík members of the board of the Czech National Bank. Their second six-year term will begin on December 1; they now serve as deputy-governors of the bank and will retain their positions. President Klaus said the bank could do more to boost the growth of the Czech economy; Vladimír Tomšík however noted the central bank’s main responsibility was to maintain the stability of the Czech currency and the inflation rate was close to the bank’s target. The Czech crown strengthened slightly upon the news.
Speaking in Brussels, the Czech prime minister, Petr Nečas, has said he will reject the latest draft European Union budget for the 2014 to 2020 period. He says he cannot accept a reduction in the bloc’s cohesion fund that would see the amount available to the Czech Republic fall from EUR 26.7 billion in the current seven-year budget period to EUR 19.5 billion in the next one. The funds are available to all regions except Prague. Mr. Nečas has said that the Czech Republic, unlike a number of states, is not threatening a veto, but, he added, neither would it approve any plan whatsoever. EU leaders are set to return to the negotiating table at noon on Friday, though there are fears that no agreement will be reached.
Three different rates of the value added tax could be in place in January 2013 due to a possible delay in approving the government’s tax legislation, the Czech branch of the advisory firm PricewaterhouseCoopers said on Friday. If the process of approving the tax package is delayed, a single VAT rate of 17.5 would come into force on January 1. This will be replaced by two rates of 15 and 21 percent, respectively when the government legislation comes into effect later in the month. This would be an unprecedented situation for the country’s businesses and firms, PwC said.
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