(Repeats story from Thursday)
By Jana Mlcochova
PRAGUE, Jan 1 (Reuters) - The Czech 2008 budget deficit will
be much lower than planned, giving the government a fiscal
cushion to offset the impact of the economic crisis, Prime
Minister Mirek Topolanek said on Thursday.
Topolanek also said he would announce a previously planned
cabinet reshuffle, with "significant" changes, on Jan. 5, and
said his government would set a date for euro adoption on Nov. 1
-- ending years of Czech resistance to a specific target.
He said he would set up a council of economists, including
opposition nominees, to come up with solutions for any impact of
the economic crisis on the central European economy.
Unlike many of the Czech Republic's western European Union
peers, who are trying to spur their economies out of recession
and back to growth with publicly-funded stimulus packages, the
Czechs have taken pains to keep state spending in check.
But Topolanek said the central state budget was likely to
show a 20 billion crown ($1.05 billion) gap in 2008, versus a
recent forecast of 60 billion crowns, and he indicated that
prudence could be used for an emergency economic boost.
"We have created ... assets reserves (equal to) 1.5 to 2
percent of (GDP)," Topolanek said on Czech TV. "And we are able,
in the case the economy drops below 2, or possibly 1 percent
(growth), to use this money."
Since June, the approved deficit was planned at 71.3
billion, although a 2009 debt strategy released by the Finance
Ministry last month saw a 2008 shortfall at 60 billion crowns.
The Finance Ministry expects growth to slow to 2-3 percent
next year, from 5.7 percent in 2007, but the Czechs have avoided
a more serious hit from the economic crisis and evaporating
demand from the euro zone, the Czechs' main export market.
CABINET CHANGES
Topolanek's centre-right cabinet has struggled to push
through reforms in tax, healthcare and other areas and suffered
a crushing defeat in October regional and Senate elections.
In the reshuffle, first announced last month, Topolanek said
he would switch ministers who had failed to sell reforms to an
unwilling public.
"It think it will be significant. The people will not leave
because they did not manage its tasks in the government, but
rather that they did not manage the presentation," he said.
He did not comment on specifics. Analysts said healthcare
and transport might be targeted, but finance and foreign affairs
were likely to be untouched, particularly after the Czechs took
over the European Union presidency on Jan. 1.
Topolanek named the day his government would set a date to
adopt the euro as Slovakia became the euro zone's 16th member.
The Czechs have so far resisted setting a formal date to
adopt the euro, saying the flexibility of the Czech crown and
independent monetary policy are more advantageous in their path
to catch up with the richer euro zone.
They can meet the compulsory Maastricht criteria -- apart
from the required two-year stint in the ERM-2 exchange rate
mechanism -- if inflation falls as expected this year.
"The fact that we will meet the Maastricht criteria is
obvious," Topolanek said. "I declare here responsibly that on
Nov. 1 this year the government will set a date for euro
adoption."
(Reporting by Jana Mlcochova; Writing by Michael Winfrey,
editing by Mike Peacock)
