Chamber of Deputies chairman Vaclav Klaus said at a conference on the EU eastwards enlargement in Brussels that today's European Union was held captive by a false ideology of a unified continent and idea of being European, which represses the role of nation states and pushes a harmful supranational approach. According to Klaus, the countries of Central and Eastern Europe had dreamt of an open society but they were instead being offered mass regulation and protectionism. Unifying laws are forced on them as are regulations and policies leading to weakening of the democratic processes which have been developing for centuries, Klaus added. Former communist countries have no alternative now but EU membership at any price and to do all they can to be accepted as members quickly, regardless to what they think of the model of European unification, Klaus complained.
Deputy Finance Minister Eduard Janota told CTK that the next cabinet has to change the structure of budget expenditures, otherwise it would have to make drastic cuts in non-mandatory spending to keep state finance balanced. Such drastic cuts, though, could paralyze some sectors of state finance, added Janota. A long-term fiscal outlook of the Finance Ministry expects a balanced budget in 2003-2004, with state financial assets operations excluded. After inclusion of ČKA losses, the projected deficit rises to CZK 44.3bn in 2003 and CZK 25.0bn in 2004. The outlook is based on legal regulations currently in force and it calls for a reform of expenditures recommended by the IMF and the World Bank.
The Finance Ministry and the Czech National Bank agreed on the necessity to clarify by the end of 2001 all legal aspects of a potential Czech state bond issues on foreign markets. According to Eduard Janota, the legal conditions for the financing of the state debt abroad have not been met yet. Unlike the Ministry of Finance that wants to issue bonds abroad, the CNB still prefers domestic bonds. "From the point of view of the state, musing on financing the debt abroad is legitimate, but we do not find it appropriate now," said CNB vice-governor Ludek Niedermayer. Niedermayer admitted, though, that the CNB could not prevent the Finance Ministry from issuing the bonds abroad. The Finance Ministry argues that reasons for bond issues abroad include a limited capacity of the Czech market, but also the fact that the Czech Republic was the only Central European country that did not have a benchmark
Finance Minister Jiri Rusnok announced that SDC International from the U.S. was the main candidate for a strategic partner of lorry maker Tatra Koprivnice. Based on experts' recommendations, the cabinet is about to decide within 60 days whether it will choose the partner that had been recommended or someone else. According to CTK information, SDC International along with Czech Partners company are the only players in Tatra's sale at the moment.
The Czech crown tracked euro/dollar on Thursday. In the morning, CZK slightly strengthened against the EUR in line with the European currency loss vis-a-vis the USD. After a correction in the afternoon, the crown closed at 34.32/35 CZK/EUR, slightly below late Wednesday’s 34.29/32. CZK/USD was trading at 37.10/12 late Thursday, up from 36.79/81 the previous day.
Bond prices fell again on Thursday. Most sales occurred in the morning when investors got rid of long state bonds and selected corporate titles (Unipetrol 9.00/04 lost 50bps.). The longest state 6.95/16 bond shed 20bps to 102.85/15, yielding 6.63/60 %. The state 6.75/05 lost 10bps to 102.80/10, yielding 5.80/72 %.
|Late on September 20|| bond yield ||Late on September 19|
| State 6.75/05||102.80/10||5.80/72||102.90/20|
| State 6.95/16||102.85/15||6.63/60||103.05/35|