Czech President swears in new caretaker government

By bne IntelliNews July 10, 2013

Czech President Milos Zeman swore in on Wednesday (July 10) a new caretaker government led by his longtime leftist ally Jiri Rusnok, CTK newswire reported. Rusnok, who was finance minister in a Zeman-led cabinet a decade ago, was appointed on June 25 to form an interim cabinet to replace the centre-right coalition government of Petr Necas, who resigned last month in the wake of a bribery and spying scandal. Rusnok must now seek a vote of confidence in parliament within 30 days in order to remain in power until scheduled general elections in May 2014. It is dubious whether Rusnok will gain the confidence vote, as no parliamentary party has so far announced it will support it. Both the three parties of the outgoing centre-right coalition and the leftist opposition view the appointment of Rusnok as PM as a power grab by Zeman. However, even without the support of the parliament, the cabinet could govern until May 2014 as there is no constitutional deadline for the President to appoint another PM. Early elections can be called if 120 out of the 200 lawmakers in the parliament’s lower house vote to dissolve the parliament and thus provoke a snap ballot.

Rusnok and his 14 ministers, including former PM Jan Fischer as finance minister, will start working immediately. One of the cabinet’s main tasks is to draft next year’s budget. Rusnok has said he will try to keep the target of the outgoing cabinet to maintain the budget deficit below EU’s 3% ceiling in 2014 but hinted that this year’s budget gap target of CZK 100bn might be exceeded in order to support the ailing economy that has been contracting for six straight quarters till March 2013, the longest on record.

The appointment of a caretaker cabinet is not expected to have a major effect on the market that is used to frequent cabinet reshuffles as in the past decade it saw seven governments come and go. But analysts predict that it may lead to delay in a USD 10bn project for the expansion of Temelin nuclear plant operated by state-owned power group CEZ. The company wants to select a supplier for two more reactors at Temelin by September 2013. Rusnok has said his government will lack the mandate to decide on the tender.

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