Czechs draft constitutional law to cap public debt.

By bne IntelliNews May 30, 2012
The Czech finance ministry has drafted a constitutional law to put a ceiling on the public debt, CTK newswire reported. The bill, which is awaiting government approval, envisages the government to b required to present at the lower house of the parliament measures to cut the dept if it exceeds 40% of economic output. If the debt reaches 45% of GDP, the cabinet will have to cut at least 3% of the budget spending planned for the current year and if the debt exceeds 48% of GDP the government will have to propose a balanced or surplus budget for the next year. The cabinet will be obliged under the law to ask for a vote of confidence at the parliament if indebtedness hits 50% of GDP. The Czech Republic's state debt last year accounted for 41.2% of the GDP, well below the EU's 60%-ceiling and about half the EU average. The bill, called the Financial Constitution, should take effect as of 2014. It envisages also stricter budget rules for self-governing regions and the establishment of a five-member National Budget Council that will monitor the development of public finances and evaluate it.

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