Czech MPs curb some spending to meet deficit goal

PRAGUE, Nov 8 (Reuters) - The lower house of Czech parliament approved on Wednesday two amendments delaying some public spending increases beyond next year to save money and prevent a widening of the already bloated fiscal deficit.

The decision delays previously adopted laws changing the system of sickness benefit payments and civil service law.

The draft 2007 budget -- approved in the first out of three required house readings last month -- has counted on the delay in the dates when the laws take effect to keep its deficit at the targeted level of 91.3 billion crowns ($4.17 billion).

The budget was expected to save more than 8 billion crowns on sickness benefits, provided that the revamp of the system is re-scheduled to 2008 and 2009 as approved by the lower house on Wednesday, local media have reported.

Social Democrat deputy and former Finance Minister Bohuslav Sobotka, who backed the changes, told Reuters the delay in the effective date of the civil service law would curb spending by an estimated 3 billion crowns.

Before coming into force, both amendments must be approved by the Senate and signed into law by President Vaclav Klaus.

The changes aim to dampen a sharp rise in social and welfare spending approved before a June election, which has drawn the ire of central bank policymakers for inflating a deficit in the budget already burdened by high welfare spending.

The shortfall is not officially forecast to fall below the euro zone entry threshold of 3 percent of gross domestic product (GDP) before 2010, which has forced the Czech Republic to abandon its already doomed target to adopt the euro in 2010. ((Reporting by Marek Petrus; Editing by David Christian-Edwards; Reuters Messaging: rm://marek.petrus.reuters.com@reuters.net; e-mail: prague.newsroom@reuters.com or marek.petrus@reuters.com; Tel: +420 224 190 477)) ($1=21.91 Czech Crown)

Keywords: ECONOMY CZECH SPENDING