(Repeats story published late on Wednesday)
By Jan Korselt
PRAGUE, Dec 10 (Reuters) - The Czech lower house approved
the 2009 budget on Wednesday but the impact of the financial
crisis on projected revenues means the government will almost
certainly need to rein in spending or even let the gap rise.
The proposal, drafted in the middle of the year before a
financial crisis hit global economies, is based on 4.8 percent
2009 economic growth expectations, which Finance Minister
Miroslav Kalousek said was "beyond the border of reality".
The draft, approved by the government's minority with the
help of independent deputies, sees a public sector deficit at
1.6 percent of gross domestic product and a central government
deficit of 38.1 billion crowns ($1.90 billion).
Data showed earlier on Wednesday that the Czech economy rose
by 4.2 percent year-on-year in the third quarter, a revision
from previously reported 4.7 percent, and is seen slowing below
3 percent next year.
Kalousek said he was ready to rein in spending to keep the
deficit on track, but a big shortfall in revenues resulting from
weaker growth would lead to a wider gap.
"If revenues fall short by some 10 billion (crowns) to 15
billion, I am able to compensate for it by cuts... (but) if this
gap was bigger, then of course it will come to the detriment of
a higher deficit," the minister told Reuters.
He said he saw the economy expanding by 2.5 percent to 3.2
percent next year [].
The Czechs, less affected than big European countries by the
financial crisis, do not plan any big fiscal steps to fight the
downturn.
The government has said it would look at stimulus measures
such as export assistance only if growth slumps below 2 percent.
The government however pushed through a tax cut on
Wednesday, leaving 18 crowns billion more on employees' pay
checks next year, a charge already predicted in the budget.
WIDER GAP, FINANCING WORSE
Analysts said it seemed clear the budget gap would grow, as
the government would not want to undermine the weakening economy
with budget restrictions if revenues slow.
"We do not think the government will be able to keep the
deficit at the approved level," said David Navratil, an analyst
at Ceska Sporitelna, adding he expected 2009 growth of 1.5
percent.
"If the government tried to keep the deficit (at 38 billion)
would expect growth at 0.5 percent."
The financial crisis and stimulus packages adopted by other
government threaten to push up debt financing costs, further
augmented by a wider deficit.
Deputy Finance Minister Eduard Janota said on Tuesday he saw
big challenge in debt financing next year, as risk aversion
continues to be rampant, European governments borrow more and
risk premia stay high.
The government has said it planned to raise up to 132.6
billion crowns in debt next year, including roll-overs of
maturing debt.
Hungary said on Wednesday it may use part of emergency loans
provided by the IMF and the European Union to finance its budget
gap next year [].
(Writing by Jana Mlcochova and Jan Lopatka; Editing by Victoria
Main)
