Coalition leaders agree to slash 2005 budget deficit

Stanislav Gross (vpravo) a Karel Künhl, foto: ČTK

Following weeks of controversy, coalition leaders this week agreed on the framework for the 2005 state budget. The draft proposal envisages a budget deficit of 84 billion crowns, down from an earlier proposal of 94 billion. The ten billion crown reduction should bring the Czech Republic closer to fulfilling the criteria set by the European Commission's Convergence programme. But after the smiles and handshakes for the cameras, government ministers find it hard to agree on where the money should be saved.

Defence Minister Karel Kuhnl and Prime Minister Stanislav Gross, photo: CTK
Once again, the Czech Prime Minister Stanislav Gross moved to keep the peace within the fragile three party governing coalition. After weeks of holding out, the Social Democrats bowed to the will of the two smaller parties in government and a threat from the Christian Democrats to walk out if the budget deficit were not significantly reduced. Now there are rumblings of discontent within the Social Democratic Party, because a significant part of the money will have to be saved on sickness and unemployment benefits. And despite their insistence on slashing the deficit, the two smaller parties of the coalition government - the Christian Democrats and Freedom Union are loath to part with money from their own ministries.

In fact Defence Minister Karel Kuhnl of the Freedom Union has said that cuts in his ministry's budget could threaten the ongoing military reform programme, which includes making the army fully professional from 2005. Finance Minister Bohuslav Sobotka insists that the burden of the proposed reduction must be borne by all three coalition parties. The Labour and Social Affairs Minister Zdenek Skromach of the Social Democrats has promised to save up to 4 and a half billion in his sector. The three ministers of the Christian Democratic Party -of foreign affairs, transport and the environment - have offered to save one billion each. Which leaves two and half billion to be found somewhere else. The ministers have plenty of ideas -but for the most part they concern ministries other than their own. Some of the hottest battles over the 2005 budget are now being fought behind the scenes - as members of the Cabinet strive to produce a draft budget for which each of the 101 coalition deputies in Parliament will be willing to raise their hands. Because it is clear even now that the opposition will oppose this budget proposal as one man.