Czech govt halts budget talks til next week-source

...government source told Reuters.

The government must hand over the budget draft to parliament by the end of September.

The Finance Ministry has proposed a draft budget which aims to cut the overall deficit to 2.95 percent of gross domestic product, down from an estimated 4 percent this year and just below the EU's 3 percent limit.

The central state budget draft sees a deficit of 70.8 billion crowns, with revenues rising 9.2 percent to 1,037 billion and expenditures growing by 6.4 percent to 1,107 billion.

The overall fiscal gap also includes regional budgets, the health insurance system, and various off-budget public funds.

Adoption of the budget should please the European Commission, which earlier on Wednesday called on the Czech Republic to cut the deficit below its 3 percent limit next year.

The government has pushed through parliament a package of tax and welfare changes as the first step toward cutting the deficit to 2.3 percent by 2010.

High deficits forced the Czechs to drop a 2010 euro entry target, and the new centre-right cabinet, in office since January, has refrained from setting a new target saying the date should only emerge after further fiscal reforms are adopted.

Finance Minister Miroslav Kalousek had suggested 2012 as the new entry date.