Lowering deficit main obstacle to fiscal pact - Czech PM


14.05.2014 12:06

Prague - The Czech government could have a problem fastly lowering the structural deficit if it fully acceded to the fiscal pact, Prime Minister Bohuslav Sobotka (Social Democrats, CSSD) told journalists today.


Premiér Bohuslav Sobotka vystoupil 30. dubna v Hrzánském paláci v Praze na tiskové konferenci s prezidentem Evropské unie Hermanem Van Rompuyem (není na snímku). ČTK Kamaryt Michal

He said it would have either to raise taxes, to which the government ANO movement is opposed, or make cuts in mandatory payments, which the CSSD rejects.

The government of the CSSD, ANO and the Christian Democrats (KDU-CSL) supposes that the country would fully abide by the pact only after the country adopts the euro.

The fiscal pact requires the states that join it to pass within one year a law that will ensure that the structural deficit of the state budget does not exceed 0.5 percent of GDP.

According to the Convergence Programme, the structural deficit should be close to 1.7 percent of GDP in the years to come.

"The quick lowering of the structural deficit below 1 percent is actually the biggest obstacle for us. I could imagine it if we were able to progress in the coalition debate on taxes," Sobotka said.

The opposition TOP 09 said on Tuesday it would support the fiscal pact and drafts of state budgets that would be in harmony with the pact requirements.

However, TOP 09 made its agreement conditional on the government saying between the first and second readings of the pact in the Chamber of Deputies that it is going to abide by the rules of budgetary discipline.

Sobotka said today he will meet TOP 09 to discuss its offer.

The government needs support of the former government party to have the constitutional majority of 120 votes in the lower house of parliament to pass the pact. The coalition only has 111 votes.

The government approved the country´s accession to the EU fiscal pact at the end of March. Sobotka said previously, the Czech Republic would apply the pact´s main measures only after it adopts the euro.

He said the Czech position is comparable with that of Lithuania, Poland and Sweden.

ANO head and Finance Minister Andrej Babis said previously the Czech Republic will not be prepared to enter the euro zone during the current government´s term that expires in 2017.

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