Czech c.bank cuts 2008 public budget gap forecast

...without parliamentary approval, the CNB's Inflation Report showed on Friday.

The report revealed the bank has lowered next year's fiscal gap forecast to 3.0 percent of GDP from a previous estimate of a 3.4 percent shortfall made in April. The 2007 deficit forecast was kept at 3.5 percent of GDP.

"In connection with the lowering of the deficit (forecast) we expect fiscal policy to have a restraining impact on demand next year," the report said.

As in April, the CNB's updated fiscal outlook did not take into account the government's key proposals for tax changes and public spending cuts which are currently being debated in parliament.

[PRAGUE/Reuters/Finance.cz]