Finance Ministry proposes state budget deficit of 88 billion crowns for 2007

The Finance Ministry has proposed a state budget deficit of 88 billion crowns, the equivalent of around 4 billion US dollars, for next year. The Finance Ministry - counting on revenues of almost 880 billion crowns - has said it expects 5 percent economic growth and inflation at 2.8 percent in 2007. Unemployment is expected at about 7.4 percent. In order to meet the proposed figures the ministry has said that a number of projects will need to be put on hold, among them an amendment to the law on health insurance. Raising sales tax on tobacco products to meet EU norms will also be a necessity.

In the next year, the deficit should be no greater than 3.8 percent of the GDP to keep the country within the parameters set in the euro convergence programme. The Czech Republic is aiming to adopt the European Union's currency in 2010.