Czech MPs change budget despite finmin criticism

...deficit to its highest since a record shortfall four years ago.

The amendments seek to cut spending on pensions, healthcare and other expenditure mandated by law to create room to divert funds towards farm subsidies and hundreds of small projects presented by deputies from both sides of the floor.

The amendments were approved in votes preceding the final vote on the budget, which is expected later on Wednesday.

Tlusty warned on Tuesday against approving the amendments, saying that they -- together with other changes considered by parliament -- would inevitably lead to a higher deficit as the government was obliged to meet its legal commitments in protected areas of expenditure.

Tlusty said that the changes risked increasing the state budget deficit by 6.4 billion crowns ($305 million) from a proposed 91.3 billion.

The central government budget is the biggest part of public finances which are forecast to show a shortfall of 4 percent of gross domestic product (GDP) next year, way above the 3 percent threshold set by the European Union for member countries.

Another budget risk identified by market analysts is if a planned sale of a small stake in power firm CEZ stalls. In that case, budget expenditure would need to rise by 31 billion crowns to fund road and other investment projects.

The budget is expected to be approved in its amended form as both ruling Civic Democrats and the main opposition Social Democrats contributed to the draft and want to avoid entering a restrictive provisional budget regime.

Together the two parties hold a sizeable majority in the 200-seat lower house.

[PRAGUE/Reuters/Finance.cz]