UPDATE 1-EU ministers press Czechs to cut budget gap faster

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European Union finance ministers urged the Czech Republic on Tuesday to speed up its budget deficit cuts, refusing to extend beyond 2008 a deadline that it be cut to below the bloc's ceiling.

"The council (EU ministers) considered there to be no reason to extend the deadline further," the ministers said in a statement. "It recommended that the Czech government bring the deficit below the 3 percent of GDP by 2008 at the latest."

After it joined the EU in 2004 the Czech Republic agreed to reduce its deficit to beneath the bloc's cap. But Prague told the European Commission early this year it may miss the target as its deficit was likely to be 3.5 percent of GDP in 2008 and 3.2 percent in 2009.

The ministers told the Czech Republic that to achieve the deficit goal it should cut its structural deficit -- a gap that excludes one-off and cyclical factors -- by 0.75 percent of gross domestic product between 2007 and 2008.

The ministers' decision marked another step in the EU's excessive deficit procedure against the Czech Republic.

Since the country is not yet a member of the euro zone, the EU cannot go to the final step of this procedure and impose a fine. But the EU is able to freeze part of the regional aid for those member states which persistently breach the ceiling.

A deficit below 3 percent of GDP is a key criterion for joining the euro zone but the government says it is in no rush to adopt the currency.

Keywords: EU CZECH/BUDGET

[LUXEMBOURG/Reuters/Finance.cz]