UPDATE 1-Czech budget not under control-c.banker quoted

(Adds details, background)

PRAGUE, Sept 20 (Reuters) - Czech state finances are not under control and the country should start discussing a new euro entry strategy, the daily Mlada fronta Dnes quoted central bank board member Michaela Erbenova as saying.

But Erbenova said discussing a new entry date in place of the unrealistic 2010 target did not make sense until there is a change in the system of healthcare, pensions and overall public sector finances.

"State finances are not under control at this moment," the daily quoted Erbenova on Wednesday as saying.

The country's top policymakers, including Prime Minister Mirek Topolanek and central bank chief Zdenek Tuma, have said it was unlikely the country could join the euro zone in 2010 as planned by the previous cabinet.

A number of central bankers have slammed the 2007 budget outlook which sees a sharp widening of the public sector deficit to 4.6 percent of gross domestic product, way above the 3.3 percent target and the 3.0 percent limit for euro adoption.

The new right-wing minority cabinet has blamed the previous leftist administration for leaving behind the widening gap, although most political parties approved new welfare spending before elections in June.

"This (euro entry) strategy was not being fulfilled, so now we should talk mainly about the reasons and not just the date of euro adoption," Erbenova said. "The time has come to seriously discuss a new strategy on the euro."

Erbenova pointed out that pension reforms still to be adopted would bring additional costs of 1.5 to 2.0 percent of gross domestic product. It would not be good to time them for the period when the country needs to meet the Maastricht criteria governing euro entry.

The new cabinet lacks a parliamentary majority and is expected to lose a confidence vote due by Oct. 4. If it loses, it will stay in power for weeks or even longer while talks on forming a new cabinet are held.

Analysts say there may be early elections next year, given the tie between left and right-wing forces in the June polls. ((Reporting by Jan Lopatka, editing by David Stamp; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474))

Keywords: ECONOMY CZECH EURO