RPT-Czechs may miss EU budget deficit target - minister

                                
 (Repeats story published on Sunday)
                                
 By Michael Winfrey
                                
 PRAGUE, Feb 1 (Reuters) - The 2009 Czech budget deficit
could widen beyond the 3 percent Maastricht criteria required
for adoption of the euro if growth falls below 1 percent this
year, Deputy Finance Minister Eduard Janota said on Sunday.
                                
 He also said his ministry had not yet made a definite
decision on whether to issue a euro-denominated bond this year
and that it would make the call based on the situation on
markets.
                                
 In a quarterly forecast released on Friday the Finance
Ministry had said 2009 growth would slow to 1.4 percent, a
forecast well below its previous 3.7 percent but one many
analysts said was still very optimistic.
                                
 In that assessment the ministry saw this year's public
finance deficit almost doubling to 3 percent. Janota said it
could be wider if growth fell to where analysts expect.
                                
 "If we have growth of around 1 percent (the deficit) won't
be more. I think we can keep the public finance deficit at
around 3 percent of gross domestic product and we can fulfil the
Maastricht criteria," Janota told Czech Television. 
                                
 When asked if the deficit could be more than 3 percent of
GDP if growth was lower, Janota said: "In that case it is very,
very realistic".
                                
 The central bank has said growth could be close to zero this
year and many analysts say the Czechs will be hard pressed to
avoid recession.
                                
 Lower growth would lead to lower budget revenues, while
expenditure, bound by the budget law, would stay the same unless
the law is changed, Janota said.
                                
 Among other rules regarding euro zone entry, a country must
keep its public finance shortfall smaller than 3 percent. 
                                
 The Czechs have yet to set a date for swapping their crowns
for euros, but the government is planning to set one in
November. The Finance Ministry has said 2013 would be the
earliest possible date for adopting the single currency.
                                
 
                                
 EUROBOND
                                
 Regarding the euro-denominated bond issue, Janota said the
Finance Ministry's debt strategy planned for one a year. It has
mandated Barclays Capital, Deutsche Bank and Ceska Sporitelna to
manage one, but has given no signs on the timing or size.
                                
 "The question is whether to issue at the start of the year
or wait to see if the situation improves and we can issue in the
second half of the year," he said.
                                
 "At the moment we are working on the (eurobond) issue but
there is no definite decision whether we will realise it.
Because, why enter into bad conditions, worse conditions, on
foreign markets when we could do that on the domestic market?" 
                                
 The Czechs and other emerging European states are facing
much higher borrowing costs than in previous years due to the
global credit crunch. 
                                
 In the Czechs' case debt that cost 25 basis points over
mid-swaps in June, 2008 could now cost around 200 basis points
over swaps. Poland priced a five-year 1 billion euro issue last
month at 300 basis points over mid-swaps, versus 60 last June.
                                
 Another problem is debt markets that are becoming flooded
with new issues from borrowers like Germany that have better
ratings than EU newcomers like the Czechs, as those countries
move to fund large fiscal stimulus packages to try to jump-start
economic growth out of recession.
 (Reporting by Michael Winfrey; Editing by Greg Mahlich)