Business briefs

It's been an eventful week for the Czech Republic in terms of European Union affairs, the Czech health-care system, and small businesses, with changes to the EU's Stability and Growth Pact agreed and two complaints against the Czech state filed in Brussels.

EU Stability and Growth Pact revised to account for pension reform

European Union leaders meeting in Brussels on Tuesday approved a softening of the so-called Stability and Growth Pact, the set of guidelines meant to keep EU member states' budget deficits under control and reduce inflationary pressures. Under the revised Stability Pact, countries will be able to deduct the costs of a pension reform from their fiscal deficits. The new agreement allows countries to break more easily the pact's deficit limit of 3 percent of gross domestic product, a condition that also applies to EU members like the Czech Republic which have not yet entered the eurozone. More importantly, countries that have reformed their pension systems will be allowed to take those costs into account over the next five years.

Czech Republic expected to be the last Central European country to adopt the euro

Photo: European Commission

Nonetheless, according to a study released on Wednesday by Bank Austria Creditanstalt, the softening of conditions make it more likely that Poland, Hungary and Slovakia will join the eurozone by 2009; followed by the Czech Republic the following year.

PM Stanislav Gross criticises EU decision to delay liberalisation of cross-border services

Prime Minister Stanislav Gross in Brussels, photo: CTK

In related news, the Czech Prime Minister, Stanislav Gross, who attended the Brussels' meetings, criticised the EU's decision to delay the liberalisation of cross-border services, saying that a completely open labour and services market was a key goal of the Czech Republic. His deputy prime minister for economic affairs, Martin Jahn, added that populous EU countries like France and Germany, which had pushed for the delay, had little reason to fear so-called "social dumping" from its smaller neighbours to the East, which have lower labour costs.

EU Commission has launched proceedings against Czech Republic over used car regime

In other EU-related news, the European Commission has launched proceedings against the Czech Republic for restricting the free movement of used cars. The Commission argues that conditions for registering imported used cards are stricter than those for domestic used cars.

Pharmaceutical companies' association to file complaint in Brussels against Czech pricing system

The International Association of Pharmaceutical Companies, too, has filed a complaint against the Czech Republic with the European Commission. The head of the association told the CTK news agency that the complaint centres around what he called the untransparent setting of prices on medicines. The current system lacks clear regulations, the pharmaceutical companies say, and prevents the introduction of new and more effective medicines on the market.

Czech doctor's association says VZP owes its members over $130 million

Meanwhile, the Czech Doctors' Association (LOK) has called on the Health Minister, Milada Emmerova, to force the country's health-care insurers to pay the money they owe to doctors and hospitals. The state-run General Health Insurance Company, VZP, now owes public hospitals and hospital pharmacies over $130 million dollars. The doctor's association says the debts leave medical facilities unable to pay off their own mounting debts to distributors of medicines.

Senate rejects bill on electronic cash registers

The Senate this week overwhelmingly rejected a bill that would have required cash-based businesses to use registers with fiscal memories as of January 1, 2007. Senators voting against the bill said that they doubted the measure would achieve its goal of raising more tax revenue, and feared it would prove overly costly to many small businesses.

Cabinet approves transfer of unused military land to municipalities

The Cabinet, meanwhile, has approved the transfer of old army bases and other military property worth about $60 million to adjacent municipalities, acting on a request by Czech town halls. The military will transfer a total of 24 facilities to the municipalities, which can then sell or transfer them to other interested parties tax free.