In Business News this week: the government presents its anti-crisis plan hot on the heels of a shares and currency meltdown; the home loans market shows deeper signs of suffering; a potential rival to ČEZ shapes up; and the energy giant seeks to change its image.
Second slice of Anti-Crisis Plan unveiled
Photo: CTK
The government fleshed out its measures to cushion the impact of the world financial crisis by unveiling its National Anti-Crisis Plan. The plan, drawn up by its special team of advisors and costed at 41.5 billion crowns, was approved by ministers on Monday. Its main elements are cutting firms’ social security costs, faster tax write offs for equipment purchases, scrapping sales tax on new cars and government guarantees for loans to small and mid-sized companies. Employees will pay lower social charges, have greater opportunities for re-training at work, but face being dismissed with one months’s notice instead of two. The latest moves should compliment the first round of measures unveiled in December, but they still have to be passed by Parliament. Presenting the steps Wednesday, Prime Minister Mirek Topolánek said the overall package will give the economy a 180 billion crown, or around 7.8 billion dollar, stimulus but will make a 74 billion crown hole in the budget. The boost represents 4.7 percent of Gross Domestic Product.
Package preceded by shares and crown nosedive
The timing could not have been better - or worse - with the crown taking a battering and shares plunging on the Prague Stock Exchange the day before the crisis plan presentation. Warnings from a top credit ratings company that banks which have made loans in Central Europe could be exposed to serious defaults on repayments sparked the damage. The crown fell to nearly 30 crowns per euro, a more than three year low, on Tuesday and also dramatically weakened against the dollar. Some newspapers talked of a massacre after shares nosedived. The key PX index fell 6.8 percent to its lowest level since 2003, with banks among the biggest losers.
Home loans feel crisis chill
Photo: Štěpánka Budková
The once booming mortgage market has also been hit hard according to January figures. The volume of home loans was down 44 percent compared with the same month a year earlier, Hypoindex, which monitors the Czech Republic’s nine biggest lenders, reported. Analysts say business is down because banks are more choosey about their lending and some buyers are waiting for prices to bottom out before they make their move. The mortgage market already began to slide last year with the overall level of loans dropping to less than four billion euros from a record five billion euros in 2007.
PPF Group fuels energy competition
Photo: Archive of Radio Prague
A potential heavyweight rival to Czech energy giant ČEZ was officially unveiled Monday in the form of a new joint venture between the Czech-Slovak investment group J&T and the PPF group. PPF Group says it has bought a 40 percent stake of a new company, largely created out of J&T’s energy assets. These include just over 40 percent of Prague electricity distributor Pražská Energetika, ownership of Pilsen heat and electricity producer Plzeňská Energetika and a series of heat and power companies dotted across the country. With PPF backing, the new company says it will seek to bolster its existing position as the biggest domestic rival to ČEZ with plans to invest between 10 billion and 20 billion crowns on buying up and building new energy plants in the next few years. PPF’s biggest shareholder is the richest Czech, Petr Kellner.
While ČEZ waives payments for jobless
ČEZ meanwhile seems to be trying to sweeten its image, tarnished by steep electricity price rises and high management bonuses in recent years. As part of its anti-crisis effort, it is offering to waive one quarter’s electricity pre-payments for customers who lose their jobs, as long as they meet certain conditions. Based on insurance cover taken out by the company, the offer should take effect from March and should run to the end of the year. But ČEZ says it could prolong it if the crisis continues.
