Czechs to hike 2007 deficit target-FinMin in paper

...million), Finance Minister Vlastimil Tlusty was quoted as saying on Thursday.

Lawmakers approved the 2007 state budget on Wednesday with a a 91.3 billion crown shortfall.

But Tlusty told the daily Hospodarske Noviny parliament's simultaneous decision to divert funds earmarked for pensions and other spending mandated by law towards hundreds of small municipal projects would result in a deficit overshoot.

Tlusty estimated the deficit could widen to 98 billion crowns, the highest level since a record gap four years ago.

"I am convinced the (next) government will have to submit an amendment to the State Budget Act, which will in essence be one sentence: The deficit increases to (a higher number)," Tlusty told the daily in an interview.

Tlusty fiercely opposed any shifts in spending within the budget and became the country's first finance minister to actually vote against his own budget.

Talks on forming a broad coalition government collapsed late on Wednesday after Prime Minister Mirek Topolanek's rightist Civic Democratic Party ended negotiations with his leftist rivals, leaving the country in a political vacuum.

The Czech Republic has been without a stable government for over six months after centre-right and leftist parties each won 100 seats in the 200-seat lower house in a June general election.

The two sides showed a brief moment of cooperation by jointly working on, and approving the 2007 budget, fearing the alternative, a restrictive provisional budget regime.

[PRAGUE/Reuters/Finance.cz]