Business News

Pension system reform proposal on the table

Labour and Social Affairs Minister Vladimir Spidla has unveiled the government's vision of pension system reform. He said the Cabinet had adopted the so-called Swedish model, which retains continuous financing but allows people to decide when they want to retire. There has been much discussion in recent years about reform of the outdated Czech pension system. The ruling Social Democrats now seem to have abandoned the widely-approved idea of a system based on three pillars - continuous financing, compulsory individual saving and voluntary saving with private pension funds. Experts say reform is essential, due to the rapid ageing of the Czech population, which will inevitably lead to higher taxation and lower pensions. The government still wants to discuss the draft with other political parties before submitting it officially to parliament.

Final decision on Cesky Telecom privatization postponed

The Czech Cabinet has postponed a final decision on the method and timetable of privatisation of the fixed-line monopoly telephone operator Cesky Telecom until the end of September. Originally, the Cabinet was to discuss the issue by the end of June, but the establishment of an interministerial task force has taken longer than expected, as has the selection of an adviser for privatization. The new deadline is September 30, 2000.

CSOB completed management reshuffle at IPB

The CSOB bank has completed a reshuffle of top managerial posts at the IPB bank, which CSOB acquired in June. CSOB replaced 11 high-ranking managers in departments including finance, risk assesment, human resources, strategic planning, information services and corporate banking. Some of the 11 senior managers who were replaced chose to stay on in lower positions. CSOB acquired IPB last month following the imposition of forced administration on the troubled bank by the Czech National Bank.

Government not interested in 2-billion-dollar revenue

The Czech economic daily Hospodarske Noviny quoted the British bank HSBC this week, which suggested that the Czech Transport Ministry could deny the treasury 2 billion USD in revenues, due to the way it plans to grant licences for third generation mobile phone networks. The ministry plans to grant these licences to the current mobile operators on the Czech market for a symbolic 200 million USD. However, HSBC claims, if the Czech government sold four UMTS licences in an auction, it could raise as much as 2.2 billion dollars.

Kavan promotes trade in Middle East

The Czech foreign minister, Jan Kavan, visited Israel and the Palestine Authority earlier this week. Besides his diplomatic agenda, which included opening a permanent mission to the Palestine Authority, one of the main aims of Mr Kavan's visit to the Middle East was promotion of trade. Kavan's spokesman Ales Pospisil talked to Radio Prague about some of the possibilities that had opened for Czech businesses in the region.

CNB law approved

The long-lasting dispute about the level of independence of the Czech National Bank is reaching an end. The lower house of the Czech parliament passed a new law last Friday that reduces the bank's independence, despite the fact that some of the changes are at odds with the Czech Constitution and EU legislation. The law newly gives the government control over appointing the bank's board members, introduces supervision by the Supreme State Inspection Authority, and forces the bank to consult the government before making certain policy decisions. It also divides the Central Bank's budget into two parts - operational and investment, while the parliament has assumed the power to decide on the investment part of the budget.

Despite all the controversy, economic analyst Petr Zahradnik of the Conseq Finance company sees the law as an acceptable compromise. The Czech National Bank itself welcomed some of the changes but said the European Commission might protest against the parliamentary control over the Central Bank's budget. The law on the Czech National Bank now goes to the upper house of parliament, the Senate, which can correct some of the disputed changes. If not, it is still possible to appeal to the Constitutional Court.