(Repeats story published late on Monday)
* PM to meet party leaders on budget on Thurs
* Finmin pushing bills to cut gap to 5 pct/GDP from 7
* 2010 borrowing to jump above plan with no changes
By Jason Hovet and Jana Mlcochova
PRAGUE, Aug 24 (Reuters) - The Czech finance ministry is
rushing legislation changes that would enable the government to
cut the 2010 public sector gap to around 5 percent of gross
domestic product, the finance minister said on Monday.
Eduard Janota told Reuters in an interview some of the draft
laws will be ready by Thursday when non-partisan Prime Minister
Jan Fischer meets with political leaders, geared up for a Oct.
9-10 election, to find a way to save 70 billion crowns and cut
the budget gap to 160 billion crowns.
Janota, part of an interim technocrat government, had
proposed the 2010 central state budget with an unprecedented 230
billion crown deficit, meaning the total fiscal gap would be at
7 percent of GDP.
"We want to propose measures in the government where (they)
could be negotiated in a fast track procedure... theoretically
(they) could be negotiated in the (parliament's) lower house,
but there must be political will," Janota said.
Interest payments on Czech debt will rise to 80 billion
crowns in 2010 from 40 billion three years ago if no changes are
adopted to the gap of 230 billion crowns, he warned.
And borrowing needs would rise to 330 billion next year from
an earlier estimate of 260 billion crowns, he said.
Czechs have seen their public sector gap soar as an economic
crisis flung the once fast growing economy into reverse,
squeezing budget revenue while welfare spending spiralled.
Janota had laid out cuts in mandatory spending and tax hikes
to trim the shortfall but the two leading political parties --
the rightist Civic Democrats and left-leaning Social Democrats
-- have criticised various parts of his plan, although both
want agreement.
"The first signal will come from the negotiations on Thursday
of the prime minister and chairmen of the two main political
parties... whether there is or is not the will to deal with the
problem."
Czech central bankers have recently began to point to the
dire fiscal situation, with Vice-Goveror Miroslav Singer warning
on Monday spiralling budget gaps could force higher interest
rates. []
Janota said a high gap will mean increased borrowing needs.
"One hundred billion are payments of principal, so before we
spoke about 160 billion (budget gap) and 260 billion
(borrowing), now we are speaking about 230 billion and 330
billion," Janota said.
However, he added some one-offs, such as privatisation funds
or state dividends, could cut the overall borrowing figure.
He said he could not rule out another eurobond issue this
year, and also didn't rule out a different foreign bond issue,
which could be a private placement, in another currency.
The Czechs sold 1.5 billion euros worth of 5-1/2 year bonds
on international markets at the end of April. The issue, along
well-bid sales since investors started taking on more risk in
March, have covered the majority of the Czechs' planned 280
billion crowns in borrowing this year.
"We will always weigh domestic conditions against abroad. If
we are certain that we will finance these issues at home and it
ia cheaper, then we will not go to the euro market," he said.
"In our strategy, we can finance by up to half from foreign
issues this year."
