Business News

Photo: Jakub Krechowicz / Stock.XCHNG

The Czech government’s pilot bond issue is sold out weeks ahead of deadline; long-term unemployment rate drops in the second quarter of 2011; the budget deficit reaches almost 80 percent of 2011 projected figure; next year’s state budget draft proposes public service job cuts; dozens of solar power companies demand compensation from Czech government.

Pilot government bond issue sold out ahead of deadline

Photo: Jakub Krechowicz / Stock.XCHNG
The Finance Ministry stopped taking orders for Czech government bonds designed for individual investors on Friday, bringing forward the deadline from November 1st after the pilot bond issue worth 10 billion crowns was sold out earlier this week. Next year the ministry plans to issue bonds worth 40 billion crowns, some 20 percent of the government’s overall borrowing need for 2012. The pilot bonds come in three types, with a maturity of one and five years Interest on the five-year bonds will be paid out annually and the bonds will be redeemable four times a year without penalties. Finance Minister Miroslav Kalousek is promoting the Czech government bonds as one of the “safest and most conservative” methods of saving as well as a responsible investment tool that will help the health of the country’s finances.

Czech Statistical Office: Czech long-term unemployment rate drops in 2Q

At the employment office
The number of Czechs who have been unemployed for more than a year decreased in the second quarter of 2011, according to the Czech Statistical Office. In the second quarter, the total number of long-term jobless people was just under 140,000, the lowest since the first quarter of 2010. According to statistics, women tend to be more affected by long-term unemployment as well as people with only primary education or secondary education without a high-school leaving exam certificate. The highest degree of long-term unemployment was reported in the Moravian-Silesian, Ústí nad Labem, and South Moravian regions. The capital Prague and the Pardubice region were least affected. Czech long-term unemployment reached its peak in the third quarter of 2010, with 160,000 people reported jobless for more than twelve months.

Czech budget deficit at almost 80 percent of 2011 projected figure

Photo: Barbora Kmentová
The Czech state budget deficit reached 105.1 billion crowns in September, which is 78 percent of the projected figure for 2011 and the highest deficit for the January-September period in the last 10 years, the news site reported. In the first nine months of the year, state budget revenue totalled 741.9 billion crowns, 4.1 billion crowns less than a year ago. Expenditure was 847 billion crowns, compared with 845.5 billion crowns last year. The government plans to narrow the overall fiscal gap to 3.5 percent of GDP in 2012, from a planned 4.2 percent in 2011.

2012 state budget draft proposes public service job cuts

The Czech government is proposing to cut almost 7,000 jobs, or 1.8 percent of state employees, while raising salaries for other workers it will retain next year, the 2012 budget draft suggests. The number of people working in public administration would be reduced to some 425,000, according to the Finance Ministry website. The cabinet of Prime Minister Petr Nečas has passed health care and pension reform legislation and has sought to streamline budget-making processes to reduce the budget deficit. The allocation for total state salaries in 2012 will increase by 845 million crowns (45 million USD) to 128.5 billion crowns, the draft suggests. According to the ministry, the average wage in the public sector will rise by 2.6 percent reaching 23,833 crowns next year.

Dozens of solar power companies demand compensation from Czech government

Almost a year after taxation was imposed on solar energy in the Czech Republic and a number of advantages for solar power plants were withdrawn, some one hundred domestic and foreign investors are demanding financial compensation from the government, the news site reported earlier this week. If the companies succeed, the state budget might lose billions of crowns, the website writes. The Finance Ministry rules out such a possibility but admits the situation can result in arbitrations. Out of the hundred applicants for compensation, 20 foreign investors have filed claims on the basis of international agreements on investment support and protection.