* Czech opposition party sees govt deal done by Sunday
* Euro adoption secondary to economic crisis
By Jan Korselt and Jana Mlcochova
PRAGUE, April 2 (Reuters) - The Czech Republic's main
parties should agree on a new cabinet by Sunday that would
complete the EU presidency and lead the country into an early
election in October, the opposition party leader told Reuters on
Thursday.
The leftist Social Democrats chief Jiri Paroubek said in an
interview he saw a "cabinet of experts" as the only way out of a
political gridlock after a non-confidence vote last week that
toppled a minority centre-right government.
"We are able to agree very quickly... I am convinced that we
can reach the deal in a very short period of time, by the end of
this week including the weekend," Paroubek said.
The turmoil in the central European country has undermined
its position as the holder of the EU presidency and strengthened
the role of euro sceptic President Vaclav Klaus who will appoint
any new prime minister and government.
The plan for a technocratic government has raised protests
in Prime Minister Mirek Topolanek's Civic Democratic Party
(ODS), with some party members complaining that the party has
gone to far to appease the opposition, casting doubts over the
possibility of an agreement.
Paroubek called on ODS to "accept the political reality"
that does not allow the formation of a majority cabinet without
cooperation between the outgoing coalition and the opposition,
none of which have majority in parliament's lower house.
No agreement has been reached so far on nominations for key
ministerial posts, including the prime minister, Paroubek said.
Personal rivalries and defections from the government camp
have driven the political upheaval which has less to do with the
global crisis that felled governments in Hungary and Latvia.
The Czech Republic has seen a drop of more than a fifth in
industrial output, but its banks have been stable and the crown
currency <EURCZK=> recovered from losses earlier this year,
thanks to low overall debt and low exposure to foreign credit.
NO EURO SOON
The Social Democrats have pushed for fast euro adoption, but
Paroubek said switching to the euro any time soon was out of
question after anti-crisis measures that are expected to bloat
the budget gap beyond levels prescribed for euro candidates.
"Euro adoption is a secondary issue... at this moment we
need to keep the economy running," Paroubek said, estimating the
2009 budget deficit at 150-200 billion crowns ($7.44 billion),
or 3.9-5.2 percent of gross domestic product.
"Freezing it or cooling it, pounding it into the ground by
making major budget cuts... is a road to hell, the real road to
hell," he said, referring to Topolanek's comments last week in
which he described the dangers of U.S. spending measures.
As part of the government deal, Paroubek's party wants to
push through measures to combat the crisis through boosting
consumption. The ruling party on the other hand wants to ease
pressure on companies by measures such as cutting taxes.
Paroubek said the party would tolerate for a limited time a
Civic Democrats proposal for a reduced social security tax paid
by companies.
But the ruling party must agree a 25,000 crown ($1,241)
scrap subsidy for a new car purchases, bigger unemployment
benefits and tax deductions for children.
Paroubek also said he would not block the privatisation of
Czech Airline CSA, previously criticised by his party.
(Editing by Louise Ireland)
