Governing coalition approves final framework for reform

The leaders of the three ruling coalition parties on Sunday approved further details of the planned budget reform aimed at reducing the growing deficit in public finances. The proposed reform will include sweeping changes in the pension and social systems, tax adjustments as well as changes in state administration.

Governing coalition approves final framework for reform

Vladimir Spidla, Cyril Svoboda and Petr Mares, photo: CTK

After late night talks at the Kolodej Chateau over the weekend the leaders of the three coalition parties emerged to tell newsmen they had reached agreement on a final framework for reform. The aim of this fiscal reform is to cut the deficit in public spending to four percent of GDP by 1996, a step which should prepare the ground for the adoption of the Euro. This will mean a smaller slice of the pie for the health sector, the farming sector, the education sector, for science and technology research and lower pensions and social benefits for all.

Moreover 30 thousand civil servants working in all areas of the public sector will find themselves out of a job within the next three years. Although the coalition talks reached agreement on structural changes - leaving the sensitive issue of individual budget reductions for Monday's Cabinet meeting -individual cabinet ministers braced for the inevitable impact of cuts in spending. Health minister Marie Souckova:

"The reform of the health sector is not just about income it is also about spending and we have to tap our reserves, review spending in such a way as to meet our requirements."

Even as the Cabinet divides a noticeably smaller pie among its ministries, trade unions are out in the streets protesting against reforms which they consider to be "kinder to the rich and harder on the poor". But trade unions are not the main threat that the fragile governing coalition faces. Public support for it has dropped even before the pinch of reforms has made itself felt and the opposition Civic Democratic Party is making no secret of the fact that it is preparing for early elections. In a position of strength, the leading opposition party is biding its time and preparing for two crucial moments which could topple this governing coalition - the passage of the proposed reform through Parliament and the approval of next year's budget in the autumn. With a razor sharp one vote majority in Parliament and unpopular fiscal reforms looming the Czech governing coalition is walking a tightrope.