The minister of finance, Miroslav Kalousek, has admitted to being drunk in interviews to broadcast media outlets on Thursday, the news site iDnes.cz reported. Mr. Kalousek slurred his words and struggled to speak coherently in interviews for Czech Radio and TV Nova on the subject of tax reliefs for flooded businesses. Speaking on Friday, the minister said he had had two shots of spirits and, as he was tired, they had affected him more than he had expected. He apologised and said he would not offer excuses similar to those produced by other politicians in the past.
In Business News this week: flood damages estimated between 10 and 20 billion; insurers to pay over 7.5 billion in flood compensation; government to offer tax breaks to inundated businesses; Czech economy in deep recession while household spending up; and car sales down by 13 percent between January and May.
Prime Minister Petr Nečas announced on Wednesday that the government will increase the emergency budget for post-flooding transportation infrastructure repairs by two billion crowns. The government had already released 1.3 billion crowns from the infrastructure fund on Monday. As a result of flooding, fallen trees and landslides, 93 roads and around seven railroads in Bohemia are still closed. No estimates have been released for total damages to transportation infrastructure.
Prime Minister Petr Nečas has pledged CZK 5.3 billion towards dealing with the impact of the floods. Speaking at the village of Zálezlice in central Bohemia, which was also devastated in 2002, Mr. Nečas said most of the money would come from this year’s budget, while some would be found in a fund for road and rail infrastructure. He said the country would also seek help from the EU’s Solidarity Fund and has discussed the matter with senior officials from Saxony, which has also suffered from flooding. Meanwhile, public collections have gathered around CZK 3 million for victims.
The Czech Finance Ministry will temporarily ease austerity measures; instead, it will use government spending to stimulate economic growth, the news agency ČTK reported on Friday quoting the ministry’s fiscal outlook. The ministry expects this year’s deficit of Czech public finances to drop to 2.8 percent of GDP from 4.4 percent in 2012; in the following years, the deficit should remain at similar levels. The ministry therefore believes it will be able to use government spending to stimulate economic growth. According to the latest predictions, the Czech economy should stagnate this year, and grown by around 1.2 percent of GDP in 2014.
In this week's Business news: Central bank governor says the Czech Republic won't adopt the Euro before 2019; The OECD lowers the forecasted growth for the Czech GDP to -1.0 percent; The automomotive industry increased revenues by 7 percent last year; Google releases Business Photos in the Czech Republic; Bosch plans to hire 100 more engineers for its South Bohemian innovation center.
The Constitutional Court has completed the first day of hearings concerning the proposal to repeal the law on church property restitution. The proposal was submitted by 18 senators from the Social Democratic, Communist and Public Affairs parties, who claim the law, which came into effect earlier this year, goes against the separation of church and state. The group suggested a number of witnesses to be heard by the court on Wednesday, but the panel of judges rejected them. According to the disputed legislation, the government will pay out approximately 134 billion crowns in property and financial compensation to religious institutions, as restitution for property taken away from them by the state. After hearing the evidence and final arguments, the Constitutional Court suspended proceedings on Wednesday afternoon until next Monday.
In Business News: the IMF has advised the Czech government against making further budget cuts in view of the country’s worse-than-expected economic development; Finance Minister Miroslav Kalousek has questioned the financial wisdom of expanding the Temelín nuclear power plant; Czech arms producer Česká zbrojovka has won a multi-million crown tender to supply 50,000 pistols to the Egyptian interior ministry and the Czech liqueur maker Rudolf Jelínek posted its first loss since 1998.
The Ombudsman has said he will look into complaints regarding how banks and insurance companies are treating older clients. Apparently some financial institutions are refusing to issue older people credit cards and asking them to pay higher health insurance on trips abroad purely on the grounds of age. The Ombudsman’s Office is planning a survey of 45 banks and 52 insurance companies to get an overview of the situation. The results should be known in August.
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