Czech leftists set conditions for budget approval

PRAGUE, Oct 16 (Reuters) - The Czech Social Democrats could support the 2007 central state budget draft if the centre-right Civic Democrats (ODS) drop a plan to sell a small stake in utility CEZ <CEZPsp.PR>, the centre-left party said.

The party's leadership said in a statement from a meeting late on Sunday that keeping the state's 68 percent stake in CEZ intact was the key condition for its possible support for the budget proposed by the outgoing Civic Democrat government.

The draft budget, targeting a deficit of 91.3 billion crowns ($4 billion), starts the first of three readings in the lower house of parliament this week and support from the Social Democrats is key for it to pass.

"The leadership ... recommended that the party continues to negotiate its support for the state budget in the first reading on condition that the ODS abandons the intention to privatise CEZ and ends the untruthful campaign about the state of public finances and apologises for it," said the Social Democrats.

Finance Minister Vlastimil Tlusty has advocated a share flotation of about 7 percent stake in CEZ on the Prague Stock Exchange as the most transparent and effective way of raising funds for tackling the deficit.

But Prime Minister Mirek Topolanek's minority government was ousted in a parliamentary confidence vote last week, protracting a lower house deadlock caused by the June general election that saw leftist and centre-right parties each win 100 seats.

((Reporting by Marek Petrus; Editing by David Stamp; 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=22.49 Czech Crown)

Keywords: ECONOMY CZECH BUDGET