In this weeks economics report: Czech foreign trade deficit increases. Czech Republic likely to cut corporate income tax, increase sin taxes. National Property Fund dismisses one-third of staff ahead planned closure in 2006. Selection of adviser for Unipetrol sale commenced. Tractor producer Zetor back in black. And many more.
Czech foreign trade deficit increases
High oil prices and continuing weak exports increased the Czech Republic's trade deficit to 9.2 billion Czech crowns, or just under 320 million US dollars. The trade deficit now stands at 14.8 billion Czech crowns for the first quarter of 2003. Oil prices increased due to the war in Iraq and the continuing lack of demand in other European countries, especially Germany, took their toll on the deficit in trade. Exports to Germany, which make up two-fifths of Czech exports, remained slow causing the surplus this country enjoys to drop by 1.5 billion crowns.
Czech Republic likely to cut corporate income tax, increase sin taxes
The governing Social Democrats, along with the remaining two coalition partners, have struck a tentative agreement to cut corporate income tax by three percent to 28 percent. The move is part of a wider set of mostly tax increases aimed at cutting the Czech Republic's budget deficit. Finance Minister Bohuslav Sobotka wants to raise the consumer tax on cigarettes from 40% to 44% before the end of this year to reach the EU-required level. There has also been a proposal to raise the consumer tax on alcoholic beverages by 31 crowns per one litre. In the past fiscal reforms have not made much progress due to disagreements within the governing Social Democrats. Reducing the budget deficit has become a major priority of the Czech government, as this move is necessary if this country hopes to join the Euro currency; prospective euro zone members must have a budget deficit lower then 3 percent of GDP.
National Property Fund dismisses one-third of staff ahead planned closure in 2006
The National Property Fund (FNM) has dismissed one third of its employees. The Ministry of Finance has stated it expects the fund to cease its operations by the end of 2006. The National Property Fund was founded in 1991 for the purpose of providing for the technical implementation of individual privatisation decisions and the temporary management of state ownership interests intended for gradual privatisation. Among other former communist neighbouring countries, Poland and the former East Germany have already abolished their privatisation agencies. Companies that are under the National Property Fund include energy provider CEZ, Cesky Telecom, and Unipetrol.
Selection of adviser for Unipetrol sale commenced
In a related story, the National Property Fund has started the selection of an adviser for the state's 63 percent share in the refining and petrochemical firm Unipetrol. The winner will be announced within 90 days and the National Property Fund has received 16 applications to date. Previous attempts to sell the Czech states share in Unipetrol failed last year when Agrofert, a Czech chemical group which was to purchase the states share, failed to make the required payments.
Tractor producer Zetor back in black
Tractor manufacturer Zetor posted a profit for the previous year of over 3.4 billion Czech crowns, or around 120 million US dollars, compared to a loss of 630 million Czech crowns in 2001. In 2002 Zetor sold over 4,000 tractors, the majority of which were exported. The company hopes to sell 5,300 tractors this year.
European Bank for Reconstruction predicts 3 percent GDP growth
In a report released this week by the European Bank for Renewal and Development (EBRD) the Czech Republic should record a 3 percent growth in GDP this year. The bank also estimates the annual inflation rate to stand at 1.3 percent and predicts a faster tempo of GDP growth for the following years.
Used car imports up by 26 percent
Imports of used cars in the first quarter of 2003 rose by 26 percent year-on-year to over 30,000 used passenger cars. Imports of new passenger cars fell by nearly 10 percent year-on-year to over 16,000. Imports of used motorcycles also greatly increased - by a full 100 percent - in the first quarter of this year. The increases can be largely attributed to the continued strength of the Czech crown.
Czech President Signs Ban on Tobacco Ads
Czech President Vaclav Klaus signed a law that bans most tobacco advertising. The law, which becomes effective July 1, 2004, prohibits tobacco advertising in all mass media, on billboards and in other public places. It limits advertising to tobacco stores and specialised publications. The law allows for tobacco sponsoring of motor sports until the end of 2006.
Largest employer sees net profit increase in first quarter
The largest coal mining company, OKD, netted a profit of over 60 million Czech crowns, or 1.9 million euro, for the first quarter of 2003. The increase in profit was due to a record high demand for coal which had a positive impact on the main economic indicators. OKD along with two other mining firms are part of the Karbon Invest Group, the largest private employer in the Czech Republic.
Two wind power plants to be built in the Czech Republic
Two wind power plants will be built in the Czech Republic by the municipality of Jindrichovice pod Smrkem in May of 2003. Both wind generators will have an output of 1200 kW. The equipment will be supplied by the Czech manufacturer Enercon. Nearly half to the cost of the project will be covered by a subsidy of the State Fund for the Environment. The municipality plans to use one half of the revenue from the power plants to go to the local budget.