Having reneged on a pre-election promise not to raise income tax and backtracked on a number of other pledges on account of limiting the state budget deficit, Finance Minister Miroslav Kalousek has said the latest round of spending cuts and tax hikes will be the last austerity measures this government introduces if economy grows as forecast.
Interior Minister Jan Kubice (unaffiliated) has effectively ruled out laying off any rank and file police offices or fire fighters, despite an expected Kč 1.7 billion cut in the ministry’s 2012 budget. Following a meeting Friday with the heads of the Prague police force and the capital’s fire brigade, he said that cuts hitherto are not threatening law enforcement efforts — in fact, he said crime detection rates are up.
In its latest quarterly macroeconomic forecast, the Czech Ministry of Finance says the Czech economy should stagnate or grow by up to 0.2% in 2012. The ministry, however, warns that due to the highly uncertain situation in the Eurozone, the forecast is tentative and thus a downward revision is quite possible. At the same time the ministry released preliminary key figures for 2011.
Speaking on Václav Moravec’s political talk show on Sunday, Czech Minister of Finance Miroslav Kalousek (TOP 09) said he plans to slash a further Kč 30 billion in public spending in 2012 in order to meet the deficit target. Union leader says ministries — not mandatory payments — should be prime target.
Just before midnight on Sunday, 14 reform and austerity bills were passed by the lower house following six days of obstruction led by the main opposition party, the Social Democrats (ČSSD). The bills include rises to VAT rates in 2012 and 2012, and social security and pension reforms. The opposition, however, says it will appeal to the Constitution Court over a motion limiting debating time on the laws.
Czech Prime Minister Petr Nečas (Civic Democrats, ODS) has said he will use all legal means necessary to bring an end to the main center-left opposition Social Democrats (ČSSD) filibuster aimed at blocking a vote on the coalition government’s reform package.
The Czech Ministry of Finance released its revised economic outlook for 2011-2012 on Monday. The ministry now says it expects real gross domestic product (GDP) growth of 2.1% in 2011, and 1.0% in 2012. In its previous outlook published in July, the ministry predicted growth of 2.5% in 2012.
The Czech government’s economic advisory council (NERV) has advised PM Petr Nečas to support efforts to stabilize the eurozone while warning the EU monetary union’s disintegration is a real possibility; it also advised the creation of emergency budgetary measures. Nečas said that to emerge from the debt crisis, the eurozone needs fiscal discipline and measures to boost competitiveness.
Addressing the lower house’s budget committee on Wednesday, Finance Minister Miroslav Kalousek said that despite falling budget revenues, he expects a budget deficit under 4 percent of GDP this year and progressively lower deficits in the coming years. Earlier Kalousek said he had ordered the government’s economic advisory council (NERV) to produce three possible scenarios for economic development.
Speaking at the Žofin Forum in Prague on Thursday, Czech Minister of Finance, Miroslav Kalousek, warned that the debt situation in the eurozone could result in an economic crisis which would impact the Czech economy. Nevertheless, he claimed the Czech Republic does not face a financial crisis.