* PM says very tough to meet 2010, 2011 deficit targets
* No sense in setting any euro entry date
By Jan Lopatka
PRAGUE, May 14 (Reuters) - The next Czech government must
stick to tough fiscal targets and start long-delayed structural
reforms to avoid a loss of investor confidence, the country's
outgoing prime minister said on Friday.
Non-partisan Prime Minister Jan Fischer said upheaval
sparked by the debt crisis in Europe made it useless to set at
this point a target date for the country's accession to the euro
zone, reflecting doubts about the euro zone's future.
Fischer will resign after the May 28-29 election but his
team is likely to stay in office for weeks or even months while
parties discuss forming a new administration, and will thus play
key part in carrying out the 2010 and preparing the 2011 budget.
He is due to become vice-president of the European Bank for
Reconstruction and Development from September. He said in the
interview he would delay his start there if talks on forming a
new government drag on.
The election has been an increasingly tight race between
centre-right parties pledging spending cuts and leftists
promising higher taxes and more social spending.
Fischer's caretaker cabinet has pledged to slash the deficit
to 4.8 percent of gross domestic product next year from the
planned 5.3 percent this year and reach 3 percent in 2013.
"Any deviation from what we have set in the convergence
programme ... would lower the credibility of this country and it
can have an impact on the stance of the financial market and
investors," Fischer told Reuters in an interview.
He said it would be extremely difficult to meet this year's
5.3 percent target, with the economy going through a fragile
recovery and a weak labour market straining the budget.
"We are worried whether we will be able to meet it, (but)
the cabinet will do all it can on the executive level," he said.
"I consider this year's deficit/GDP target to be absolutely
unbreachable, otherwise we will really make ourselves huge
problems. I am not fearmongering here, that is reality."
He said growth would pick up only slightly to about 2-2.5
percent next year from around 1.5 percent this year.
The Czech budget gap has been much lower than deficits in
manny other European countries but Fischer said the Czech gap
was driven by long-term problems and not one-off costs of aid to
banks which has been the case in many other countries.
"The Czech Republic has a number of problems in fiscal
balance which are acute, caused by the crisis...but some are
long-term, structural and they have been brewing for a long
time," he said.
More than half of the country's deficits are attributable to
problems such as the long-neglected pension system which will
lead to enormous gaps without reform, he said, adding Czechs
were lagging other countries in the region in that area.
EURO OUT OF QUESTION FOR NOW
Fischer said Europe was going through a severe crisis that
posed questions about the euro's future, and therefore it made
no sense to discuss when to join the single currency.
"With no doubt adoption of the euro, which is now in the
realm of dreams, will be the subject of huge political debate in
this country," he said.
"What is happening now around Greece is not a story of a
fault in one country and its resolution, this is a story about
the crux of the common currency," he said.
"We will surely go through a debate in Europe whether the
idea is viable...a debate on when we will join must only come
after."
The country has had to drop its previous 2009-2010 euro
entry target and currently has no official target date. The
left-wing Social Democrats have said they want to join in
2015-2016, while the main right-wing party has no target date.
