Business News

In Business News this week: the lower house approves the basic parameters of the 2008 state budget, the Czech National Bank raises its inflation forecast for next year and the European Bank for Reconstruction and Development blows the whistle on aid to the Czech Republic.

The lower house this week approved the basic parameters of the 2008 state budget. It envisages a deficit of 70.8 billion crowns (3.68 billion dollars) and is based on expectations of 5.0 percent growth and average inflation of 3.8 percent. The deficit is below the 3.0 percent of GDP ceiling required for adoption of the single European currency, although Prague has not yet set a target date for the switch from the crown to the euro. Lower house committees can now delve into the finer details of the budget, with a second and final, third, reading scheduled for early December.

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The Czech National Bank on Thursday raised its inflation forecast for next year, with overall inflation foreseen at 4.4 to 5.8 percent in September 2008. In the July forecast, the central bank foresaw end-2008 inflation at 3.5 to 4.9 percent. The latest forecast makes no major changes in the bank's economic outlook and it still reckons with an interest rate hike, according to CNB governor Zdenek Tuma. For the time being the central bank has left the interest rates unchanged with the key rate at 3.25 percent.

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Photo: European Commission

The European Bank for Reconstruction and Development will no longer provide aid to the Czech Republic, the bank's board of directors said on Thursday. The Czech Republic is the first of the post-communist states considered fully able to provide for itself. Since 1992, the EBRD has committed EUR1.1 billion to the country, financing 103 projects with a total value of EUR4.7 billion. The Czech Republic will remain a shareholder in the EBRD and will co-finance projects in third markets. It plans to support companies investing mainly in the Balkan countries, Russia and Ukraine.

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Photo: Kristýna Maková, Czech Radio

The influx of Slovak and Ukrainian workers to the Czech Republic is ebbing and many companies who have become dependent on foreign workers now have trouble finding staff, the daily Mlada Fronta Dnes reported in its Wednesday edition. Many Slovaks and Ukrainians are returning home where the number of job opportunities is growing as their economy is reviving. They are gradually being replaced by Vietnamese and Mongolians as well as Bulgarians and Romanians, but firms in the construction industry and many factories are still short of workers. In an effort to attract more foreign workers from the east the Czech government is planning to introduce "green cards" that will accelerate the process of obtaining labour and residence permits.

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Czech companies donated more than 758 million crowns (over 40 million US dollars) to good causes last year, the economics daily Hospodarske noviny says in its Friday edition, citing the TOP Corporate Philanthropist chart compiled by the Czech Donors Forum. Czech firms are among the most generous donors in Central Europe. The overall sum donated to charity is several times higher that that given by companies in Slovakia and Hungary, the paper says. For instance, Czech state-run power producer CEZ spent close to 242 million crowns (close to 13 million US dollars) on charity this year, placing at the top of the 2007 list. Ceska sporitelna bank came second, followed by insurer Ceska pojistovna, both donating around 50 million crowns (2.6 million US dollars) in support of good causes. Almost two-thirds of Czechs say their trust in a company grows if they find it supports charity.