In this week’s Business News: The Czech Republic’s state debt currently stands at almost one trillion crowns, the prime minister unveils an economic council to help steer the country through the global economic crisis and the gas supplier Česká Plynárenská secures extra deliveries from Norway to offset the impact of the gas crisis.
State debt at almost 1 trillion crowns
The Czech Republic’s state debt currently stands at almost one trillion crowns, according to the Finance Ministry. Last year, the state debt rose by more than 107 billion, while the previous year it rose by around 90 billion crowns. Today it stands at 999.5 billion crowns, just short of a trillion. This debt means that each Czech citizen carries 96,000 crowns worth of state debt, which currently represents more than a quarter of Czech annual GDP. Much of the reason for the debt is spending financed by loans from the European Investment Bank and other foreign markets. Meanwhile, household debt currently stands at around 865 billion crowns. Such debts are likely to grow as the current economic crisis leads to greater government borrowing to stimulate the economy and offset falling revenues. Conversely, the Czech budget deficit was recently reported as being the lowest in 11 years.
More gas from Norway to battle Russian cut-off
The Czech gas trading company Česká Plynárenská has announced that it has secured additional gas supplies from Norway to combat the effects of the loss of supplies from Russia, via Ukraine. Normally, the Czech Republic sources 70 percent of its supplies from Russia, with only 30 percent coming from Norway. Under the terms of the deal, agreed in London on Wednesday, one million cubic feet of gas have been secured, with the flow of supplies set to begin almost immediately. However, the arrangement does little to address long-term the gap in supplies from Russia, with around 200 million cubic metres per day required from the east. At present, the pipeline structure in the Czech Republic is not equipped to fully shift reliance away from Russian supplies – although the current crisis has made such plans gain increasing attention.
Temelín nuclear plant fails to meet power supply targets
The nuclear power station Temelín, situated in south Bohemia, has failed to meet its targets for the delivery of electricity, according to the plant’s operator CEZ. According to figures provided by the operator, the Temelín nuclear power plant supplied 12.1 TWh of electricity to the national grid in 2008, 11 percent short of its target. The failure to meet its targets is being blamed on a series of technical problems at the plant, which in several cases resulted in temporary shutdowns. CEZ had hoped that 2008 would see Temelín beating its previous record of power produced, which was set in 2004, nonetheless the power plant still produced a fifth of the total electricity supplied in the Czech Republic in 2008. In contrast, the Czech Republic’s other nuclear power station at Dukovany, announced a record amount of electricity generated in 2008. Together, the two plants generate a third of the country’s electricity supply.
Czech experiences half-billion crown trade deficit in November
The Czech Republic has reported a five hundred million crown trade deficit in November, meaning that imports have exceeded exports – a matter of concern for a country that relies on exports for much of its GDP. The figure represents a stark 13 billion crown turnaround from the previous year’s figures, and also represents the biggest year-on-year shift in fortunes since 1994, according to the Czech Statistical Office. The sharp shift from surplus to deficit is being attributed to the global economic slowdown as demand for Czech exports decreases in Europe and around the world. Indeed, the figures reveal a trade surplus of 39.2 billion crowns with Europe, but this is offset by a 39.7 billion crown deficit with the rest of the world – amounting to a net deficit of 500 million crowns. The most significant trade deficits are with China and Russia, while the strongest surpluses are with neighbouring Germany and Austria, which remain strong net importers of Czech products.
Economic council to help PM battle woes
The Czech prime minister, Mirek Topolánek, has unveiled an economic council, which is to advise him on steering the Czech Republic through the current global economic slowdown. The council will have no powers and will merely serve as an advisory body to the prime minister. Among the council members are former Trade and Industry Minister Vladimír Dlouhý, the president of the Czech Banking Association, Jiří Kunert and Tomáš Sedláček, chief analyst at ČSOB bank.