* Right-wing leader pledges quick action on fiscal gap
* Sees chance for centre-right coalition cabinet
* Factbox on election issues: []
By Jan Lopatka
VSETIN, Czech Republic, April 28 (Reuters) - The next Czech
government to be formed after May elections must act immediately
to show financial markets fiscal consolidation is underway, the
right-wing candidate for prime minister said on Wednesday.
Petr Necas, acting chief of the Civic Democrats, said he
would form a "cabinet of fiscal responsibility" that would
prevent the country from sliding into a Greek-style crisis.
The Czech Republic was far away from a Greek scenario at the
moment, Necas told Reuters. "But if populism and 'sticking the
head in the sand' win after the election, the train will take
the direction of Athens pretty fast," he said in an interview.
The Civic Democrats are trailing the left-wing Social
Democrats in opinion polls, but the May 28-29 parliamentary
election race remains open. No party has any hope of winning an
outright majority and the runner-up may have a chance to form a
majority coalition with smaller parties.
Speaking after an election meeting in Vsetin, 300 km east of
Prague, 45-year-old Necas said his cabinet would not raise the
tax burden but rather cut spending and reform the pension and
health systems, strained by an ageing population.
"I am convinced that the financial markets will appreciate,
as the first step, an acknowledgment of the problem ... and a
demonstration of willingness to tackle it," he said.
The Social Democrats have said the right was scare-mongering
over the deficits, but also promised fiscal consolidation.
Necas said the Czech debt burden was still low at 35 percent
of gross domestic product. But the speed of its growth, the rise
in debt servicing costs and climbing private debt required a
clear fiscal reform path to avoid risks of rating downgrades.
The Czech Republic is rated 'A' by Standard and Poor's,
above the troubled euro zone members Greece and Portugal.
The country's caretaker cabinet, in power since last year,
wants to cut the fiscal gap to 5.3 percent of gross domestic
product this year from 5.9 in 2009, and to 3 percent in 2013.
The Civic Democrats aim for 3 percent by 2012, and for a
balanced budget by 2017.
"We have made a clear calculation of which steps to take in
ministries' operating spending, in investment spending, but also
in mandatory expenditure," Necas said. Mandatory expenditure is
governed by law and includes welfare and pension payments.
EURO ENTRY IN QUESTION
Necas said the party was not setting any target for the
Czech Republic to adopt the euro. It was necessary to wait
until the budget deficit had been cut, and until it was clear
that joining the common currency would benefit the country.
"We want to cut the deficits and halt debt growth, not for
the introduction of the euro but for ourselves," he said.
Questions were emerging about how the euro zone would look
after its current crisis and whether it would be be right for
the Czech Republic to join, he said. However, he added that he
wanted to be ready for euro zone membership from 2015.
The Social Democrats, who may form a minority cabinet backed
in parliament by the Communists, have promised to raise welfare
payments and to pay for this with increases in corporate and
personal income taxes for richer Czechs.
They have said the pension system does not need deeper
reform, and reject any plans for compulsory individual savings.
Analysts have said both tax increases and spending cuts
would probably be necessary to achieve the deficit targets. They
have cast doubt on the next cabinet's ability to push through
the needed reforms, as opinion polls suggest the likelihood of a
small majority or a minority cabinet.
Necas said he saw solid chances of forming a centre-right
cabinet, and rejected suggestions by some commentators that the
two big parties may be tempted to form a grand coalition.
