June 2010
47 posts
Czech airlines to dismiss pilot
Czech Airlines (CSA) employs 460 pilots at present, down 70 from the year before. Yet, 40 more pilots will have to leave by the end of 2010 and a similar number in the next two years in connection with the reduction of CSA’s fleet. The information comes from a rescue plan that is supposed to avert the danger of bankruptcy from CSA. The rescue plan also includes restriction of the number of...
Pension reform to cost billions annually
The pension reform supported by a majority of a pension expert commission would entail so-called transformation costs caused by the obligatory three-percent redirection of a part of the insurance premiums from the public system to individual savings. Vladimir Bezdek, the head of the commission, says that the transformation costs will fully disappear in about 60 years. He estimates the costs at...
Corporate taxes will not rise
Czech companies have the certainty that they will not face an income tax increase in the next four years. The reason is that after the first coalition negotiations about the budget, the VV (Public Affairs) abandoned its proposal to raise the corporate tax from today’s 19 % to 20 %, which had been a part of its election platform. The party says that if they are able to gain money to...
Fortuna to target other markets
The Fortuna betting company, which belongs to the Penta group, enters the Austrian and Hungarian market. It will offer Internet bets in these countries under the FortunaWin.com brand through a Malta based subsidiary company. Online betting is the segment, in which Fortuna has registered the most significant growths in the recent years. Besides the Czech Republic, Fortuna operates also in Poland,...
Taxes will increase
The ODS (Civic Democrats) has admitted, for the very first time after the elections, that it will very probably have to increase taxes. The reasons include the poor budget situation and the promised pension reform, for which the emerging government will need new resources. Petr Necas, the likely future prime minister, will support the proposals of the Bezdek pension commission. It plans a transfer...
Tuition for students to be instated
The three parties that negotiate on the government have agreed upon introduction of tuition at universities. The tuition will most likely be paid for the first time in the school year 2013/2014, even though the TOP 09 (Tradition, Responsibility, Prosperity) and the VV (Public Affairs) would like to introduce it sooner. The parties have not reached an agreement yet on whether the tuition would be...
Insurance companies running out of money
At the end of 2010, the economic crisis will fully hit also the Czech health care, which has been resisting it for two years. Its impact will probably be very hard, because VZP and some smaller insurance companies will run out of the multi-billion surpluses they saved during the previous three years. Unless something changes, they will start to get into debts due to the high costs of health care...
CD cargo under audit, again
The state-owned Czech Railways, the owner of the CD Cargo company, has sent KPMG auditors for an extraordinary inspection into the company. The objective is to find out whether CD Cargo, one of the biggest freight carriers in Europe, carries out its business in an efficient way. The reason is that CD Cargo has reported a high loss of CZK 378 mln, instead of profits. The first inspection in CD...
Klaus vetoes CNB bill
President Vaclav Klaus vetoed a bill on the Czech National Bank, which was supposed to define the central bank’s operation after the Czech Republic’s accession to the euro area. The Czech Republic has not fixed any date of adoption of the euro yet. As the current Chamber of Deputies cannot overrule Mr Klaus, the bill thus ends its legislation process. The bill represented mandatory...
Bakala gave millions to right wing parties
Financier Zdenek Bakala has announced that he donated the total of CZK 28.5 mln to the ODS (Civic Democrats), the TOP 09 (Tradition, Responsibility, Prosperity) and the VV (Public Affairs) before the elections. He decided to support the parties because they offered responsible politicians with a reform programme before the elections. The man, who was listed among the richest men of the world by...
Stricter norms for foreign entrepeneurs
The Interior Ministry has proposed a bill tightening the conditions for business activities of foreigners in the Czech Republic to the cabinet. For example a condition required for the issuing of an entrepreneur visa would be a controlling interview in Czech with consular officers or at least two years of stay in the Czech Republic. The change is supposed to come into force as of December 2010....
New VAT proposal
The proposal of a pension reform that is being finished by an expert commission led by Vladimir Bezdek is much more radical than expected. According to the proposals, the Czechs might pay less money from their salaries for pension insurance in the future, but at the cost of a step increase in the prices of food, medications and other goods. Instead of today’s 28 %, people would...
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CSSD to head chamber of deputies
The CSSD, the party that won the elections with the margin of less than 2 %, has a chance to gain at least some important post. The representatives of the ODS, the TOP 09 and the VV, who negotiate about their mutual coalition, have admitted that they might leave the position of the chairman of the Chamber of Deputies to the CSSD. They would thus follow an earlier custom, according to which...
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State budget deficit
The state budget had a deficit of CZK 95.4 bln as of the end of May 2010; it represents the worst figure in the whole existence of the Czech Republic. The deficit increased by another CZK 17 bln in May 2010 alone. The state budget for the whole year 2010 was approved with a deficit of CZK 162.9 bln. The 2009 budget had a record all-year deficit of CZK 192.4 bln, even though the deficit...
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New government to decide on Temelin
The new coalition government formed by the ODS (Civic Democrats), the TOP 09 (Tradition, Responsibility, Prosperity) and the VV (Public Affairs) may significantly affect the country’s economy. If it is formed by the mentioned parties, the coalition will have an advantage. Whatever it approves it will push through without problems with its 118 deputies; moreover, it will easily overrule...
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Communists losing their influence
The KSCM (Communists) have gained 26 seats in the elections, the same number as in 2006. However, if the ODS, the TOP 09 and the VV reach an agreement on the formation of a government, the Communists will lose a significant part of their influence. The three parties concur that they will not support the Communist aspirations to posts in the leadership of the Chamber of Deputies. KSCM...
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Gas prices on the rise
Customers, especially those of the regional gas suppliers RWE and E.ON, will pay more for gas supplies as of the second half of 2010. Prazska plynarenska will retain the prices of gas supplies at the current level. E.ON will increase its prices by 6 % on average. RWE, which supplies gas into the rest of the country, except for Prague, will increase its natural gas prices by 4.9 %...
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Student to get loans of CZK 54 000
University students might receive a monthly contribution for studies plus loans of up to CZK 54,000 yearly. The contributions would be provided to all students and the government is supposed to lose no money, as the contribution would be covered from tax discounts for dependant children that are available for parents now. The age limit, over which students cease to have advantages, would...
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Large parties lose millions
The ODS lost 800,000 voters and the CSSD 500,000 voters in comparison with the previous Chamber of Deputies elections. This means a slump by CZK 80 mln and CZK 50 mln in the state subsidies for received votes alone. Moreover, the campaign expenses of both parties exceed the sum they will receive from the government. Source: LN 6
The winner takes it all
Bohuslav Sobotka, the acting head of the CSSD, will be entrusted with negotiation about the new government, and if he does not succeed then ODS leader Petr Necas will get a chance to become the new prime minister. President Klaus has already suggested that he would give the first chance to the winner of the elections. Mr Klaus strictly abided by this unwritten rule after the previous...
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Election results positive
Most domestic economists and businessmen regard the outcome of the Chamber of Deputies elections as positive. They think that the future government should adopt deeper economic reforms, above all of the pension system, health care and public finances. What is decisive for the economic performance at present is reforms and stabilisation of the public budgets. Source: LN 17
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Czech economy to grow
The Finance Ministry’s regular research of estimates of 15 domestic institutions shows that the Czech economy will grow by 0.8 % to 1.9 % in 2010, the average estimate being 1.5 %. Source: HN 20
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Direct investment inflow decreases
The foreign direct investment (FDI) inflow into the Czech Republic decreased by more than one-half from CZK 110.1 bln in 2008 to CZK 52.2 bln in 2009. According to the Industry and Trade Ministry, the decreasing FDI balance was negatively affected by high instalments of loans that Czech branches sent to their parent companies abroad. Source: HN 18
Biofuel ratio to increase
The ratio of bio-components will rise from 3.5 % to 4.1 % for petrol and from 4.5 % to 6 % for diesel oil as of June 1st 2010. Source: Právo 8
Flood bonds approved
The Chamber of Deputies approved the issuing of government bonds worth CZK 10 bln, making it possible for the government to cover the damage caused by the subsiding floods in Moravia. The European Investment Bank is supposed to buy the bonds from the government. However, Finance Minister Eduard Janota does not expect the government to borrow the whole mentioned sum. The minister said that...
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Tatras loses more money
The loss of Tatra Koprivnice increased by approximately CZK 140 mln to CZK 712.3 mln in 2009. The lorry maker saw its sales decrease by a half to approximately CZK 3 bln year-on-year due to the crisis. Almost 1,400 employees had to leave the company in 2009. The company employed 2,280 people as of the beginning of 2010. The staff cuts affected above all production workers. Source: HN 21
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CME takes control
The media company Central European Media Enterprises (CME), the owner of Nova TV, has gained full control of Pro TV, Media Pro and MediaVision, companies that it had partially owned before. CME has gained the remaining stakes from its head, Adrian Sarbu. Mr Sarbu will receive a financial compensation worth USD 6.2 mln for the remaining 5 % in Media Pro. Mr Sarbu’s stake in CME...
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21st century soldier
The Defence Ministry has prepared an ambitious project called 21st Century Soldier, which is supposed to provide state-of-the-art arms and equipment to smaller groups of soldiers to make the army units more operational and independent. This rearmament includes a tender for new assault rifles, which has been won by Ceska zbrojovka Uhersky Brod. The contract worth CZK 2 bln has already been ...
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We cannot afford tax cuts
The ODS (Civic Democrats) and the TOP 09 (Tradition, Responsibility, Prosperity) promise that they will try to put the national finances in order without having to increase taxes. On the other hand, the CSSD and the KSCM promote higher taxation of the rich, as usual. LN 3
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Tax office to block accounts
The Finance Ministry has launched another step aimed at restricting the thriving tax frauds connected with fuel trade. Using so-called securing orders, the tax administration started to block accounts of some fuel traders until they ensure payment of the tax. The measure is supposed to prevent suspicious companies from evading their tax obligations and leading multi-million sums to accounts...
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Mittal irritates small shareholders
Minority shareholders in the ArcelorMittal Ostrava steelworks are offered CZK 4,000 per share by the majority owner in the squeeze-out proceedings. The sum has been proposed by the parent ArcelorMittal Holdings AG, the owner of a 96.4-percent stake in the Ostrava based company. However, small shareholders disagree with the proposal and threaten with a lawsuit, demanding at least CZK 7,000...
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Czechs fear bankruptcy
37.3 % people fear bankruptcy of the public finances, according to a Median poll for the Lidove noviny daily. On the contrary, more than 45 % of respondents think that nothing like that may happen. The poll among 438 respondents aged 15 to 79 was carried out in the first half of May 2010. The Czech Republic is among the countries with greater fears in the European comparison. The...
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Czech Repuplic has favourable rating
The Czech Republic is not in danger of a downgrade of its rating in the short-term horizon. Representatives of the Fitch Ratings and Moody´s rating agencies have concurred on this conclusion before the Czech elections, having assessed the state of the Czech economy rather positively. There is even a chance of an upgrade of the CR’s rating in the medium-term horizon. However, the...
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Japanese like Czech suppliers
A poll by the JETRO organisation, which associates Japan’s most important companies, shows that the Czech Republic offers the second best suppliers in the world according to Japanese investors. Only suppliers from China are appreciated more by the Japanese. The organisation’s vice president for research also said that the quality of research and development in the Czech Republic...
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Cabinet approves PPP project
The cabinet of PM Jan Fischer made a breakthrough decision on 24 May 2010, having approved the finishing of the construction of Prague’s Stresovice Hospital. It is the first PPP (Public Private Partnership), project in the Czech Republic that may be brought to a conclusion. PPP projects are characteristic by combined financing by the government and by money of private investors. PPP...
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Tough luck for the farmer
The ministers have lost their patience and approved the expropriation of farmer Ludmila Havrankova’s land lots needed for construction of the D11 motorway. Ms Havrankova will receive approximately CZK 25 mln as compensation for her 3 hectares of land. She has rejected similar sums several times in the past. Source: LN 1
Cathedral is owned by the state
The Catholic Church has given up its legal battle for the St. Vitus Cathedral after almost 18 years. Prague Archbishop Dominik Duka and President Vaclav Klaus signed an agreement where the Church withdraws its constitutional complaint concerning the ownership of the cathedral. This means that the 2009 Supreme Court ruling confirming that the state is the owner of the St. Vitus Cathedral ...
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State salaries increase
The salaries of employees in the state administration increased by approximately CZK 1,000 year-on-year to CZK 29,345 in 2009. The state administration cost the average citizen CZK 12,000 in 2009; the expenses per one employee of the state administration amounted to CZK 781,000. The average salary of all public servants increased by 4.5 % to CZK 24,994 in 2009. The overall sum paid in...
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SkyEurope creditors will not be paid
The Bratislava Regional Court has confirmed the abolition of the bankruptcy proceedings of the failed airline SkyEurope due to lack of property. kyEurope’s employees and creditors will thus lose money that the airline owes them. The failed SkyEurope Airlines left a debt of EUR 180 mln, according to a statement of the bankruptcy asset administrator. Source: HN 24
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OP Prostejov loses millions
The Czech Republic’s largest textile company, Odevni podnik (OP) Prostejov, has reported a loss of approximately CZK 234 mln since the beginning of 2010, according to a report by the insolvency administrator. The company is under bankruptcy at present and the court is to decide whether it will continue. The company’s 2010 revenues have amounted to approximately CZK 309 mln. The...
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Cuts will likely deprive us of tethers
If Finance Minister Eduard Janota means his latest budget measures seriously, Justice Minister Daniela Kovarova will have no alternative but to forget about the announced purchase of new cars and possibly even postpone the purchase of so-called tethers (electronic monitors for people under house arrest). The ministry is also supposed to make staff cuts. Ms Kovarova says that both tenders,...
Flood financial aid
PM Jan Fischer said that the Czech government would consider the opportunity of applying for financial aid from the European Union’s Solidarity Fund. The EU Solidarity Fund was founded after floods that had devastated several European countries eight years ago. It is supposed to help both EU member countries affected by large-scale natural disasters. Countries, in which natural...
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Farewell to Rataj
The Anti-Monopoly Office UOHS, one of the key economic institutions in the country, is undergoing a distressful time period under its head Petr Rafaj. No less than three important officers are leaving the Brno based institution. It is a public secret that they are leaving due to alleged incompetence of UOHS chairman Rafaj. Moreover, former deputy chairman Robert Neruda left the office to...
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Changes for CEZ
The Czech power giant CEZ is in for changes after the elections. The ODS (Civic Democrats) according to its leader Petr Necas plans to change the currently wide-spread practice of awarding commissions to companies with non-transparent property structure. The CSSD (Social Democrats) plans to definitively abolish the share motivation programme for members of the company’s management....
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OP Prostejov to aggrevate the recession
A court in Brno has denied Ceska sporitelna voting rights in the case of OP’s bankruptcy trial as CS is the biggest creditor of the bankrupt textile company. According to the leadership of the Czech Banking Association CBA this can put addisitional strain and aggravate the economic recession. The savings bank has already lodged an appeal against the decision. Source: LN 16
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Banks investing in new branches
Domestic banks keep investing money into their branch networks, in spite of the crisis and the growing popularity of Internet banking. There are already approximately 2,000 bank branches in the Czech Republic. According to the Czech National Bank’s data, the number is about 60 higher than in 2006. Postovni sporitelna and Generali have the highest number of client branches. The...
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Solar energy to cost billions
Power distributors will pay up to CZK 10 bln in 2010 due to the growing number of solar power plants. The growing number of solar plants is making power more expensive for the Czechs. According to the latest figures of the Energy Regulation Office ERU, the Czech Republic will need CZK 30 bln yearly in order to support solar power plants. Source: HN 1