Prague - The Czech government okayed the country´s accession to the European Union´s fiscal pact, Tomas Prouza, the state secretary for European affairs, said on his Twitter account today.
Předseda vlády Bohuslav Sobotka (vpravo) a ministr financí Andrej Babiš na schůzi vlády 24. března v Praze. ČTK Vondrouš Roman
The country will have to transpose into national legislation the rules on budget discipline.
Prime Minister Bohuslav Sobotka said earlier that the Czech Republic would follow the main rules of the pact after adopting the euro.
Economists said that joining the fiscal pact would boost budget discipline and prevent governments from excessively raising the country's debt.
The government launched the debate on acceding to the pact on February 19. The discussion was suspended over unclarity as to how to adopt the accession agreement in line with the Constitution. The government wants the country to have to follow budget restrictions only after it joins the euro.
"So, it will have no immediate economic consequences. I see it as an expression of a changing European course and of efforts aimed to take part in all discussions on the shape of European integration," Sobotka said in February.
Within a year from joining the fiscal compact, the state has to adopt a rule under which the structural deficit of the state budget will not exceed 0.5 percent of gross domestic product (GDP). The country whose debt surpasses 60 percent of GDP must cut its amount by at least 5 percent a year.
The Czech Republic´s structural deficit will account for around 2.5 percent of GDP this year. The structural deficit is a public finance gap adjusted for the economic cycle effects.