The Czech government and the central bank agreed on joint steps to curb the Czech koruna's appreciation, as an expected inflow of proceeds from state asset sales boosted demand for the currency. A part of proceeds from privatization should be set aside and used for future foreign currency expenditures of the government. Another part of the proceeds should be received in koruna from a loan provided by a local bank. The rest will be bought by CNB into FX reserves.
The Lower House of the Czech parliament approved a state budget proposal for 2002 with a deficit of CZK 46.2 bn. Revenues will total CZK 690.4 bn and expenditures CZK 736.6 bn. Now, President Vaclav Havel must still sign the bill.
The Freedom Union yesterday called on the government to cancel the tender on the sale of the CEZ energy company and state shares in six regional electricity distributors as the privatization has been controversial since the beginning.
The International Monetary Fund published its new economic forecast for CEE countries. Average growth for 11 candidate countries will fall to 0.2 percent this year and 3.4% next year from 4.8% last year. Most of this year's decline is due to Turkey's economy shrinking 6.1 percent. The Czech Republic, Hungary, Bulgaria, Romania, Latvia and Estonia probably will have slower growth in 2002 than this year.
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