Business News

Photo: European Commission

In Business News this week: the prime minister this year’s state budget deficit will total at least 150 billion crowns; The Czech Republic wins arbitration over Union Banka; the energy giant ČEZ takes out a loan to build a Romanian wind farm; Czech rails are to open up to competition; the global economic downturn hits Czech prostitutes; and the central bank issues coins to honour painter Alfons Mucha and the 14th century Czech king, John of Luxembourg.

PM Fischer: State budget deficit in 2008 at least 150 billion

Foto: Štěpánka Budková
This year’s state budget deficit will amount to at least 150 billion crowns, or more than 8.1 billion US dollars, Czech prime minister, Jan Fischer, told reporters after meeting the governor of the Czech National Bank. According to previous estimates, 150 billion was an upper limit that was not expected to be exceeded. Mr Fischer said that the structure of spending would have to change in order to keep Czech public finances healthy. By the end of June, the budget deficit reached 68.3 billion crowns. This year’s deficit was originally approved at a mere 38.3 billion crowns.

Czech Republic wins 7 billion arbitration case

The Czech Republic won on Friday an international arbitration with the Italian-Dutch firm Invesmart over the bankrupt Union Banka. The firm, former owner of the bank, sued the Czech Republic for nearly seven billion crowns, or some 380 million US dollars, for failure to protect its investment. An international court of arbitration in London ruled however that the Czech Republic had breached no international laws or duties.

Union Banka existed in the Czech Republic from 1991 to 2003; at that time the Czech central bank revoked its licence and it was declared bankrupt by a court. It had some 200,000 clients and 17 billion crowns in deposits

ČEZ takes loan to build wind farm in Romania

Photo: European Commission
The Czech energy giant ČEZ took a loan of some 6.8 billion crowns, or some 367 million US dollars, to build a wind farm in Romania. The 15-year loan was provided by a four-strong consortium of European banks. The investment in the vicinity of Fantanele, on the Black Sea coast of Romania, will be the largest coastal wind farm in Europe. The output will be 347.5 megawatts and the Czech energy firm will invest a total of 27 billion crowns, or nearly 1.5 billion US dollars before the wind farm is finished by the end of 2010.

Czech rails to open up to competition

Up to 75 percent of the Czech Republic’s railroads will open up to competition within ten years, the Czech Transport Ministry said on Friday. Currently, nearly all rails are run by the state firm, Czech Railways, and the state annually pays some 3.3 billion crowns, or nearly 180 million US dollars, for the services. The Transport Ministry plans to divide the passenger railway network between several groups and organize tenders for them. The ministry’s move was welcomed by one of the largest private transport companies, Student Agency that has been trying to enter the rail transport market for years.

Crisis hits Czech sex workers

The global financial crisis is taking its toll on the Czech Republic’s sex workers. Client numbers at the country’s brothels are down in some places by as much as 50 percent, according to Hana Malinová of Bliss without Risk, an NGO which works with prostitutes. Brothels on the German border are reportedly registering the sharpest drop in customers, followed by erotic clubs in Prague, which have been hit by a fall in the number of stag parties. In response to the crisis, many sex workers are lowering the price for their services, the ČTK news agency reported on Friday. Some erotic clubs in Prague are offering up to 20 percent off entrance and drinks, whilst some sex workers have taken to accepting food vouchers in lieu of cash. According to official figures, there are between 9,000-10,000 prostitutes in the Czech Republic.

Central bank to issue Mucha, John of Luxembourg coins

The Czech National Bank has approved the designs for two new commemorative silver coins which will be brought out in 2010, Hospodářské noviny reported on Friday. The first commemorates 150 years since the birth of Czech graphic artist Alfons Mucha, while the second will mark 700 years since John of Luxembourg married Czech princess Elisabeth to become the Czech king. Both of the coins will have a nominal value of 200 crowns (11 USD), Hospodářské noviny reported.