PRAGUE, March 18 (Reuters) - The centre-right Czech
government will cut its 2011 budget deficit more than planned
and will push on with tough belt-tightening measures despite a
fall in popularity, Prime Minister Petr Necas said on Friday.
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To see Reuters Insider interview with Necas, click:
http://link.reuters.com/wed68r
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Following are comments by Necas in Reuters' interview:
BUDGET, TAXES
"It is one of our fundamental tasks to be better than our
original target so it is the reason why we would like to be
under 4.4 percent of GDP."
The official target for 2011 is 4.6 percent of GDP.
"We expect the (tax) reform to be a fiscally neutral step."
"It must be done in the framework of our number one target,
which is lowering the public sector gap."
"One of the key things (in the tax reform) is... the overall
package of tax changes must not lead to a rise in the total tax
quota."
ON DROP IN GOVERNMENT POPULARITY
"It is the political price that I was ready for and it does
not surprise me. I consider it important that we continue to do
the right and necessary reforms that we must do and in fact,
popularity is a secondary question for me now, with no election
coming up."
"We must do the healthcare reform because (the sector) is
sliding into deficit.
GDP
"I do not think (the reforms including higher value added
tax) will impact growth. Our growth is driven mainly by exports
and the decisive thing will be the performance of the key export
territories, mainly the euro zone and Germany."
"Domestic demand is not a driving force for Czech GDP."
"I do not see a fundamental impact from budget cuts on the
GDP."
ON FINANCING THE PENSION REFORM
"Raising VAT is a permanent solution (unlike money from
privatisation)."
"In many countries around us, governments have diverted part
of the money to private funds without worrying how to cover the
gap. Today they are getting in to huge problems, in Hungary,
Poland, and also in Slovakia."
"We are not going this way. We are responsible from the very
beginning."
PACT FOR EURO
"The Czech Republic understands the reasons why mainly
Germany is pushing this proposal through."
"We like many of the measures and we will be implementing
them regardless whether there is some Pact for the Euro or not."
"Which means (we will do) the pension reform, watch the
development of productivity and wages, create anti-debt brakes
in the form of financial constitution, and etc. We will do all
this regardless this pact."
"There are also thoughts that we do not agree so much with,
such as harmonisation of tax bases, corporate taxes, the
creation of consolidated tax bases, and etc."
"But we will implement most of the measures. Only we do not
think it is necessary to force other countries on the European
Union level."
"We do not count on participating in this pact at the
moment. One reason is that we were not invited to the
negotiations on March 11. Historically, the Czechs are
suspicious when there are talks about 'us, without us'."
"March 11 was the example of that. We were not invited and
then we were only presented with the result with words saying:
you can join or you do not have to join."
When asked about the way the pact for the euro was
negotiated in a separate Franco-German deal and without non-euro
members:
"I consider it a mistake to exclude part of the member
countries from decision-making whose conclusions will impact
all."
"De jure we are a euro zone member state with derogation, or
adjournment. We have the obligation to adopt the euro, only we
have not done it so far. So strictly speaking, we are a member
of the euro zone with derogation."
"We are a different case than Denmark or Britain who have
said they did not want the adopt the euro."
ON EURO ADOPTION
"We have a long-term position not to set the euro adoption
date now. It would only lead to the creation of another
artificial term about which we could not say whether it would be
met or not."
"The euro zone is dramatically changing and it is turning
into a different euro zone than the one we agreed to enter."
(Reporting by Jana Mlcochova and Michael Winfrey)
