Flood damage to be higher than in 1997, govt looking for money
The sweeping floods that hit the Czech Republic have caused enormous damage. According to estimates, the damage is likely to be higher than that caused by the disastrous floods which hit the Eastern part of the Czech republic five years ago. Insurance companies say the current catastrophe will certainly be among the biggest in the Czech modern history.
The floods have had and will have a great impact on the whole economy. Part of the damage will be covered by insurers and various humanitarian and charity organisations, nevertheless, it will require the government to find an extra billions of crowns to pay for damaged infrastructure.
Paradoxically, the floods may in the end boost GDP growth due to the large-scale repair works, some analysts say. This "pseudo-growth" of GDP would not raise the standard of living because rather than new things being created only damaged ones will be replaced. However, foreign investors are not likely to analyse this in detail and may be encouraged to invest in the Czech economy, impressed by the GDP growth.
The damage caused by the floods will be calculated within 20 days after the state of emergency is lifted. Repair of the damage will then be covered from the state budget, state funds, regional funds and budget reserves; the government is also considering an issue of state bonds.
The government has already earmarked more than 1 billion CZK from the state budget and 500 million crowns from the off-budget Transport Fund for repairs of the damages. The amount has to be approved by the parliamentary budget committee meeting on Friday. The total damage is now estimated at 10-20 billion.
Meanwhile, individual ministries are trying to find reserves in their budgets. The Local Development Ministry has immediately allocated 50 million crowns from the rural renovation programme. It has also ordered the State Fund for Housing Development to offer soft loans amounting to 150 million crowns for housing construction in the affected areas.
The Agriculture Ministry has allocated some 750 million for farmers hit by the disastrous floods and will ask the government to provide more, once the damaged can be estimated. Crops have been ruined in the flooded areas and in some places new crops cannot be grown because of wet fields. Nevertheless, the ministry says the floods should not have a significant impact on the total volume of this year's harvest.