Appointment of new central bank governor stirs controversy among politicians

Despite strong opposition from political leaders, Czech President Vaclav Havel has used his powers to appoint a new Czech National Bank governor. The move was made, however, without consulting the country's main politicans. The new man to take hold of the reins of the Czech Republic's monetary policy is the former central bank vice-governor, Zdenek Tuma. Vladimir Tax reports:

Zdenek Tuma enjoys a reputation as an inflation hawk and he has already warned that the bank would tighten its monetary policy if the current economic growth leads to stronger inflationary pressures.

Mr. Tuma succeeds Josef Tosovsky, who resigned at the beginning of November after 11 years in office. President Havel chose Mr Tuma despite strong disapproval from the two main political parties, the ruling Social Democrats and the main opposition Civic Democrats. Mr. Havel made it clear that the independence and expertise of the National Bank's board of governors was, in his opinion, more valuable than their acceptability to political parties.

President Havel has appointed Mr Tuma just a month before a new law on the Czech National Bank is due to come into effect. The law states that the new governor must be chosen by the government. This is why the appointment of Mr. Tuma has stirred fresh controversy between President Havel and some of the leading politicians.

In his reaction to Tuma's appointment, the opposition leader and speaker of the lower house, Vaclav Klaus, accused President Havel of using the Czech National Bank as a vehicle to achieve his political goals. Mr Klaus said Tuma's appointment was a threat to the bank's independence.

In an allusion to Mr. Tuma's recent warning that the central bank could raise interest rates, Prime Minister Milos Zeman said that by selecting Tuma, President Havel had in fact assumed responsibility of the Czech National Bank's future decisions, a move which he believes could lead to deterioration of Czech economic development.