UPDATE 1-Czech FinMin sees 2006 budget gap above CZK 100 bln

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PRAGUE, Oct 11 (Reuters) - Czech Finance Minister Vlastimil Tlusty said on Wednesday a shortfall in revenues and higher than expected expenditures will push the 2006 central state budget deficit to more than 100 billion crowns ($4.46 billion).

"The expected deficit in the state budget for this year can breach 100 billion crowns," Tlusty told journalists after a government meeting.

The central state budget was originally approved by parliament with a deficit of 74.4 billion crowns.

Last week finance ministry sources said the deficit would be more than planned because of frontloading a 15.2 billion crown guarantee payment to the central bank, allowing the government to narrow the planned deficit for next year.

Higher-than-expected pension payments towards the year-end were also expected to impact the final deficit figure.

Rising social spending, in part approved prior to a June election, has increasingly weighed on the EU member's fiscal balance, leading central bank policymakers and independent economists to raise alarm bells over the budget outlook.

The overall general fiscal balance is seen ending in a deficit of 4.0 percent of expected GDP in 2007, above the 3.3 percent target laid out in the programme mapping out the road to joining Europe's single currency zone.

Czechs and their central European neighbours are finding it hard to meet the stiff fiscal test needed to win euro adoption, since painful reforms are needed to trim social spending.

The Maastricht Treaty criteria say a country's general fiscal budget deficit cannot be more than 3 percent of gross domestic product (GDP). ((Reporting by Petra Vodstrcilova, Writing by Alan Crosby; prague.newsroom@reuters.com; Reuters Messaging: alan.crosby.reuters.com@reuters.net; +420 224 190 477; editing by Chris Pizzey))

Keywords: ECONOMY CZECH BUDGET