Czech FinMin: 2010 fiscal gap may reach 7 pct/GDP-radio

                                
 * Sees budget gap at CZK 256 bln if his plans not adopted
                                
 * Sees gap around 5 pct/GDP if revenue boosted, spending cut
                                
 * FinMin sceptical plans will be passed due to election
                                
 
                                
 PRAGUE, Aug 15 (Reuters) - The Czech public finance deficit
may jump to 7 percent of gross domestic product next year if
proposals to boost revenue and cut spending are not adopted,
Finance Minister Eduard Janota told a radio station on Saturday.
                                
 The Czech Republic, like other states in central Europe, has
been struggling to rein in a widening budget gap as its
export-driven economy has dived into its deepest recession since
the early 1990s due to dwindling demand in western Europe.
                                
 "If changes on the income side and mainly on the spending
side are approved by the Chamber of Deputies and the Senate, the
budget deficit could be slashed to a reasonable level, somewhere
around 5 percent of GDP in terms of public budgets," Janota
said.
                                
 "But if we were passively accepting the current situation,
then we move somewhere at the 7 percent level," he said in an
interview with Radio Cesko.
                                
 The central state budget deficit, a key part of public
finances, could therefore balloon to 256 billion crowns ($14.21
billion) next year, above the planned 170 billion, Janota said.
                                
 The government is due to discuss Janota's proposals on how
to keep the budget deficit under control on Aug. 24. But he was
sceptical that the proposed cuts would be cleared by the lower
house due to a general election.
                                
 "We are close to the election and creativity or let's say
certain populism of politicians is rising," Janota said. "I
expect that a vast majority of them would be very, very reserved
and rather criticise or to belittle (the proposals)."
                                
 Janota said last month the budget deficit would exceed 200
billion crowns in 2010 following a downward revision to the
ministry's economic forecast.
                                
 The ministry, which sees the economy growing 0.3 percent in
2010 after a record drop of 4.3 percent this year, did not give
its 2010 fiscal gap forecast in its quarterly update in July.
                                
 It expects the deficit to rise to 5.5 percent of GDP this
year from 1.5 percent in 2008. The central bank said on Friday
that the shortfall would swell to 6.4 percent of GDP in 2010,
above a euro adoption threshold of 3 percent [ID:nPRA004707].
                                
 Janota said the ministry may also propose cuts in mandatory
spending, as well as delaying the reduction of corporate taxes
to 19 percent from 20 percent and raising  value added tax and
social insurance caps.
                                
 Mandatory spending such as pensions and welfare is the key
issue ahead of the early general election on October 9-10. It
accounts for 80 percent of the overall budget spending.
                                
(Reporting by Martin Dokoupil; Editing by Victoria Main)