* Czechs start voting in tightly contested two-day election
* Risk of lengthy talks, more weak government
* Debt, corruption issues dominate campaign
(Adds prime minister voting, crown performance, vox pop)
By Robert Mueller and Roman Gazdik
PRAGUE, May 28 (Reuters) - Czech voters wary of debt and
angry about graft voted for a new government on Friday, with
polls forecasting a tight result that could lead to protracted
coalition talks and extend a decade of delays to reforms.
The two-day election pits poorer and older voters against
younger and wealthier city-dwellers who clash over how to handle
a budget deficit that has grown due to economic crisis.
Rightist parties backed by the more affluent warn of a
Greek-style meltdown without spending restraint, while leftists
backed by older, poorer Czechs pledge to cut spending but raise
taxes for high earners and firms to fund higher welfare payouts.
The leftist Social Democrats lead opinion polls. But the
party will fall short of a majority and may find it tough to
find coalition partners to form a strong cabinet and push
through its agenda. It may even be forced into opposition.
Analysts fear an inconclusive result will lead to months of
political wrangling over a new cabinet, rattling markets and
causing further delays to pension, welfare and healthcare
reforms where the Czechs have long lagged their peers.
The European Union and NATO member is slowly recovering from
a 4.1 percent economic drop under a caretaker cabinet led by
Prime Minister Jan Fischer for the past year. The 2010 budget
deficit is projected at 5.3 percent of gross domestic product.
Fischer, who is not running in the election, said after he
voted he wished for a swift instalment of a new government.
"The outside world, the European Union, is getting into a
complicated situation. There is a lot to think about, to decide
on. A number of unfinished reforms lies ahead," he said.
Polling stations opened at 1200 GMT and were to close at
2000, and voting will continue from 0600 until 1200 GMT on
Saturday. Early results are expected by Saturday evening.
The crown currency fell to a one-week low at 25.85 against
the euro, underperforming central European currencies because of
fears of drawn-out coalition talks.
LACK OF CLARITY
Mainstream Czech newspapers have been highly critical of
Social Democrat leader Jiri Paroubek for his divisive style and
for ousting a centre-right cabinet last year, causing political
disarray in the country during its term as EU president.
Leading daily Mlada fronta Dnes urged voters on Friday to
block a Social Democrat cabinet backed by the Communists, heirs
to the totalitarians whose rule ended with the 1989 Velvet
Revolution, and a party divorced from power since then.
Political pundits see such a coalition as the worst possible
outcome. "Such a result would bring unbearably high risks for
the country's politics, economy and foreign relations," the paper
wrote. Paroubek has accused the media of being biased.
The country of 10.5 million people has government debt
equivalent to 35 percent of GDP, just half the EU average.
But economists say that figure will grow fast without
reforms and could threaten the country's solid credit ratings
that are higher than some euro zone states.
They say a rightist government would better implement cost
cuts and changes to a pension system strained by an ageing
population.
A string of corruption scandals has hit the big established
parties, especially the Civic Democrats, who trailed the Social
Democrats 3.4-11.5 points in recent polls.
Disillusionment over graft has helped lift smaller groupings
such as the conservative TOP09 and the anti-corruption Public
Affairs party. Analysts say the Civic Democrats could
potentially form a majority coalition with them.
"The main thing is to get rid of the corruption. We need
things to be better for the elderly, healthcare and so on," said
80-year-old pensioner Vlasta Turnova, after voting in Prague.
(Writing by Jan Lopatka and Michael Winfrey; Editing by Mark
Heinrich)
