Czech govt okays 2008 budget draft, gap lower y/y

...taking into account reform steps that have yet to win parliamentary backing.

Finance Minister Miroslav Kalousek told a news conference after a cabinet meeting that the draft sees a deficit of 78.4 billion crowns ($3.68 billion), down from a 91.3 billion crown shortfall budgeted for this year.

The state budget is the biggest part of the overall public finances, the key yardstick for measuring a European Union member country's fiscal stability, which also includes municipal finances and health care insurers.

The centre-right administration's fiscal package cutting social and discretionary spending and overhauling taxes cleared an initial vote in the lower house of parliament last week.

But the government controls only 100 seats in the 200-seat lower house and the legislation is likely to come under heated debate for changes in the final two readings.

FACTBOX ON FISCAL REFORM PROPOSALS..............[ID:nL07797331]