Will Mertlik's departure delay privatisation process even further?

Pavel Mertlik

Tuesday's unexpected resignation of the Czech Finance Minister Pavel Mertlik has economists speculating about how this could effect the country's economy - in particular whether it could delay the long overdue privatisation of the country's remaining state owned enterprises. Leading economic expert Miroslav Singer thinks that Mr Mertlik's resignation will make little difference, telling Radio Prague's Daniela Lazarova that the Social Democrats' commitment to privatisation has been weak from the outset:

Pavel Mertlik
Miroslav Singer: The slow pace of privatisation is not based on any internal battle or power lobby within the government. It's based on the nature of this government.

Radio Prague: According to Zdenek Tuma, the Central Bank Governor, Minister Mertlik's resignation is a signal that the country's public finances are running out of control, that the deficit is simply too steep. The World Bank has recently issued a warning about the deficit which is tied to bail-outs of state owned banks and big companies, which, again, Mertlik's chief rival in the cabinet, Trade and Industry Minister Miroslav Gregr, is pushing through. Does this mean that the debt will now grow even further?

MS: Yes it does, but it's also worth reminding ourselves that Minister Mertlik was the man who signed the budgets and it is he who bears the lion's share of responsibility for the budget deficit - it is strictly within his sphere of competence...

RP: Of course he signed those budgets - but if he had the Prime Minister and the Industry Minister as well as several others against him there was very little he could do and he has resigned now to prove it.

MS: Well, frankly speaking he's like the guy who invites you to a restaurant for a nice dinner, orders the dinner, has every intention of paying for it and then suddenly finds that he has to leave in the middle of the meal. It doesn't make much difference whether he intended to leave early or not - you are simply stuck with paying the bill. And this is exactly what Mr Mertlik did. He may have believed that things would change, that the budget would be balanced after the country came out of recession but this did not happen. It is not going to happen and there are a number of people who were able to predict this development well in advance. After all Mertlik knew Gregr when he took office, he knew Zeman and he had been involved in party policy... He has definitely been the most sensible of them but nevertheless we are now going to pay for all his mistakes.

RP: That's a rather pessimistic view of the future though. After all the Czech Republic has to meet the EU's criteria for admission. It has to privatise fast, it has to keep that deficit down. So what happens now?

MS: I don't think we can expect any of these things prior to the elections. We are already entering the pre-election period and there doesn't seem to be any strong political grouping that is capable of pushing through these things in the following 12 months and, well, it may be pessimistic, but that's all we can expect...

RP: Are you saying that there will be no more privatising - or very little - before the next elections?

MS: I expect the privatisation of Komercni Banka to go through. I am not sure about utilities. I think the energy sector could probably be privatised without an advisor but even that's rather questionable so I do not expect too much progress in these areas.