Business News

In Business News this week: public debt sets gloomy record; mining limits look set to stay; inward investment plummets; big is not beautiful for Czech farms; and small coin losses make big profit for national bank.

Czech public deficit widens to five month record

Czech public finances occupied centre stage in the recent elections and look set to stay there after a record deficit was announced in the first five months of the year. The ongoing 2010 deficit — the difference between what the state spends and the money coming in —deepened by around 17 billion crowns in May to total 95.4 billion crowns in the first five months of the year. That is a record overdraft for the first five months of the year. What is more, it is already almost three-fifths of the planned deficit for the whole year. If the trend continues, the country will be heading for an end of the year deficit of around 200 billion crowns.

Centre-right parties committed to no change to mining limits

Photo: Tomáš Fencl

While the elections wiped out the Green Party from the lower house, environmentalists have been given one crumb of comfort. They point to the fact that the centre-right parties lined up to form a future government are all opposed to abolishing limits on mining brown coal in the north-west of the country. Removing those limits would open up around 800 million tonnes of coal, making the Czech Republic, self-sufficient in brown coal for the next 40 years at least. Privately-owned mining company Czech Coal and Severočeské Doly, owned by state-controlled power colossus ČEZ, have the most to gain from the mining limits being bulldozed.

Inward investment projects drop by a third in 2009

Photo: Štěpánka Budková

The Czech Republic, along with most of Central Europe, suffered a dramatic drop off in inward investment projects last year. The number of such major projects dropped to 61 compared with 87 in 2008, according to a survey by global accountancy company Ernst & Young. Across the region, there was a 40 percent drop in inward investment projects. CzechInvest, the government agency aimed at enticing such investment, said the fall started in mid-2009 but interest was already picking up by the end of the year. According to one theory, the Czech Republic could score again as an investment location for companies seeking a cheaper base compared with Western Europe.

Czech farms’ future seen in specialist crops

Czech farms are on average the biggest in Europe in terms of their overall hectares, according to a survey by the Czech Statistical Office. The survey also found Czech farms came in fifth place in the European Union in terms of the average number of employees. Part of this concentration has occurred over the last decade as big farms bought out struggling smaller ones. But the snapshot of the sector is not particularly rosy given continued low prices for agricultural goods. The survey sees some salvation in growing specialized crops such as rape seed and diversification into bio-fuel projects.

Small coins add up to big bonus for national bank

And finally, the Czech National Bank has just admitted to a 157 million crown, around 8.0 million US dollar, windfall profit from coins that went out of circulation seven years ago. The 10 and 20 haler piece were officially withdrawn in 1993 but until last year could be exchanged at the national bank for valid currency. With that deadline now history, the bank made a calculation of all those tiny coins, perhaps dropped down the sofa, which never came back. These added up to a maximum 721 million 10 haler pieces and top figure of 541 million 20 haler coins.