The government canceled a tender for the privatization of the Czech power sector according to the recommendation of the privatization committee. The Finance Ministry and the Industry and Trade Ministry will have to submit a proposal for further action in the sale of power utility CEZ and six regional power distributors by Feb 28. Prime Minister, Milos Zeman added that a possibility of a direct sale, without tender can not be ruled out.
Unemployment rate rocketed to 8.9% in December 2001 from 8.5% in November. The number was in line with our expectations while it was above the market consensus. Unemployment rate at the end of 2001 was thus marginally higher than at the end of 2000, regardless rather robust economic growth in 2001.
Consumer prices index rose 0.1%, month-on-month, and 4.1%, year-on-year, in December. We can identify two main forces influencing general price level in December: a fall of gasoline prices and a steep increase of food prices. The headline CPI rose dramatically in June and July, then the trend reversed and inflation began to fall. Finally, at the end of the year the value of y-o-y CPI change is almost the same as in December 2000. Thus, CNB has reached its inflation target for the first time since the inflation targeting was introduced in the Czech Republic.
The government decided to postpone a decision about the financing of the purchase of new Gripen jet fighters. The issue should be discussed in 14 days again. Consortium BAE Systems, fighter producer, offered to help the government to negotiate with foreign and domestic banks a debt financing of the deal.
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