The Czech lower house on Friday approved a draft of the state budget for 2014 in the so-called first reading, sending it for debates in the house committees. The draft budget has a projected deficit of 112 billion crowns which would leave the gap in public spending below 3 percent of GDP. It is based on growth expectations of 1.3 percent, which would bring an additional four to five billion crowns in tax revenues to state coffers. The parties of the emerging government coalition – the Social Democrats, ANO and the Christian Democrats – have said they would like to see the budget approved by the end of the year.
This week in business news: Travel Service Airlines to buy 34-percent stake in Czech Airlines; Developer Metrostav files arbitration suit against Prague over Blanka tunnel payments; Nominal average wage has risen by 322 crowns, but real wages stagnate; GDP has fallen in Q3 by less than was expected; Mining company OKD will have a new director starting January; Industrial space is the fastest growing sector of the Czech real estate market.
Metrostav, the construction firm building the Blanka tunnel complex in Prague has confirmed that work on the project will cease on December 7, over unpaid bills. The company has filed a complaint against Prague City Hall at an arbitration court and is demanding 2.1 billion crowns for work already completed. Efforts by city hall officials to reach an out-of-court agreement have failed.
The cabinet has approved a proposal from the Finance Ministry to issue bonds worth almost 210 billion crowns next year. The ministry plans to use these to buy up bonds already on the market, so the issue is not expected to increase state debt. The government also decided on Wednesday to add 7 billion crowns to next year’s budget for the State Agriculture Intervention Fund.
The average monthly salary increased by 322 crowns in the third quarter to 24,836 crowns. Adjusted for inflation, this is an increase of only a tenth of a percentage point, which basically signifies a stagnation of wages. Around two thirds of people employed in the Czech Republic, though, receive a lower salary than the average, with the median being currently around 21,000 crowns. Long-term stagnation and slight decreases in real wages is leading to a decrease of household spending, which the Czech National Bank was hoping to thwart with its recent intervention against the crown.
Electricity prices for households are expected to drop by 10.9 percent on average in 2014, while the regulated component in the price of gas should drop by 5.9 percent, the Energy Regulation Office reported. CEZ clients can expect the biggest price drop of around 12 percent, Pražská Energetika has announced a 9.5 percent drop while E.ON will effect an 8.8 percent price reduction.
Prague City Hall and the construction firm Metrostav have failed to resolve the controversy over the Blanka tunnel complex under construction in the Czech capital. Metrostav recently warned it would cease further construction work on December 7 over unpaid bills. City Hall said it had stopped further payments after having found that the contract on building work was legally invalid. Metrostav claims it is owed 2.1 billion crowns and is handing the matter over to an arbitration court. Prague City Hall had hoped to reach an out-of–court settlement in order not to jeopardize one of the city’s largest building projects.
In Business News this week: household energy prices to fall markedly in New Year; poll find most firms have experience of dodgy tenders; percentage of part-time job rises – but still lags EU; Czech e-tailers mark Black Friday; more shops selling fake goods, say inspectors; and 4 percent of Czechs don’t possess mobile.
The head of the ANO party in the Vysočina region, Jan Sobotka, will not become member of Parliament as a replacement for an ANO MP who stepped down. Mr Sobotka told reporters on Thursday he would reject the seat in the lower house over a failure to file his tax returns, and a debt in his health insurance payments. Mr Sobotka was to replace another party official elected on the ANO ballot in the region who had resigned over his past as a member of the former communist military counter-intelligence. The chairman of the ANO deputies’ group in the lower house said they would thoroughly screen the next person on the ballot who’ll replace Mr Sobotka.
Prague’s court of appeals on Thursday lowered the sentence for Czech fugitive Radovan Krejčíř by six months to 10.5 years in prison. The court however also issued a fine of three million crowns for Mr Krejčíř; if he fails to pay it, he will face another year and a half in jail. Radovan Krejčíř was last year sentenced in absentia to 11 years in prison for fraud and tax evasion. The Czech businessman fled the country in 2007, and has since settled in South Africa where he was arrested last week on charges of kidnapping and attempted murder.
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