Left-wing triumphs in dramatic debate over 2010 Czech budget

Jan Fischer, photo: CTK

After a day of drama and bitter wrangling on Wednesday, the Czech parliament approved a budget for next year. But it was not the budget that the caretaker government had banked on. Left-wing parties led a last minute revolt and pushed through a series of new spending measures. We look at the final result and the likely fall out for what looks like a humbled and weakened government.

The budget prepared by Prime Minister Jan Fischer’s caretaker government received a mauling at the hands of the left-wing Social Democrats and Communists backed by a few independent MP’s. To the planned public deficit of around 163 billion crowns they added a 12 billion crown package of spending on teachers, state officials, social services and farmers.

Jan Fischer,  photo: CTK
At some stages during the debate, the stony-faced prime minister looked and seemed to indicate that he might resign. In the end, he tried to look on the bright side of life by explaining that things could have been even worse.

“The Czech Republic has a state budget approved for 2010. We are not dealing with a provisional budget but with a 2010 budget where the problems with public finances are more acute and apparent than I would have expected or imagined and which would have been radically diminished if the budget as prepared by the government had been approved.”

Prime Minister Fischer said a provisional budget would have basically meant that the government would next year have been working according to this year’s spending plans. That would have sent a clear signal of financial incompetence to ever watchful international ratings agencies and money markets. It would also have meant that the country could have lost out on billions of crowns in European Union cash because the matching funding would not have been there.

It was that ugly scenario with which Prime Minister Fischer urged the right-wing Civic Democrats and TOP 09 deputies not to torpedo what was clearly an unpalatable budget for them. They left the chamber rather than vote for it.

Civic Democrats Ivan Langer,  Petr Nečas,  Petr Tuchoř  (left to right),  photo: CTK
Leading Civic Democrat Petr Nečas gave his verdict afterwards. “Today in the house was a victory for populism, irresponsibility and the short-term election campaign of the socialists. The approved budget with its devastating alterations is not good for the Czech Republic. The Czech Republic will have a higher public deficit than is either desirable or sustainable.”

If the new spending is underwritten by more government debt and not grabbed from some other sector, then next year’s Czech deficit as a proportion of Gross Domestic Product will climb from 5.3 percent to 5.7 percent.

Mr Nečas also warned darkly that his own party would have to draw its own conclusions from the fact that the government had failed to push through its budget proposal.

But the commentator for the weekly Respekt, Jan Macháček, says the budget vote was as much a defeat for the Civic Democrats as a victory for Jiří Paroubek’s Social Democrats. And he says they have only themselves to blame.

Social Democrats Jiří Paroubek,  Lubomír Zaorálek,  Zdeněk Škromach  (left to right),  photo: CTK
“They have simply no leadership or strategy. They are bringing no negotiating results. You know, the former prime minister and chairman of the Civic Democrats, Mirek Topolánek, gave up his mandate in parliament and he was not even there yesterday. He was somewhere abroad. So there is no leadership. No-one is trying to convince these undecided MPs. So I think that the best conclusion for the Civic Democrats would be to start within their own party. I think that is the main problem here.”

Mr Macháček says the budget should calm nervous financial markets. And he tips the Czech government to survive until elections next May in spite of this bruising budget reversal.