The Freedom Union (US) is another major Czech political party (following ODS and KDU-CSL) that rejected the 2002 budget draft worked out by the minority CSSD government. Ivan Pilip from the US, a former finance minister, said that the whole financial policy of the cabinet should be reviewed. According to Pilip, steps were to be done that would make it possible to reduce mandatory spending and disputed or uncertain incomes should have been left out from the draft budget’s revenues. Freedom Union´s chairperson Hana Marvanova added that the proposal of CSSD leader and Labor and Social Affairs Minister Vladimir Spidla to give all new-born children CZK 50t they could spend only after 18 years on housing or education was "irresponsible and nonsensical."
Standard & Poor's ratings analyst Konrad Reuss told CTK that the Czech Republic and other EU top candidates from CEE should not be seriously hit by expected investors´ run away from risk areas following the week's terror attack on the U.S. Reuss said the credit position of the five front-runners for EU membership including the Czech Republic was stable and investors should not expect any remarkable changes in their credit ratings in the nearest future. In a longer-term perspective, the ratings are likely to improve rather than to decline as pre-accession reforms are implemented. Reuss criticized the Czech fiscal policy as overly expansive and said that the country should embark a reasonable fiscal behavior as soon as next year. On the other hand, Reuss admitted that the share of the public debt in GDP and foreign direct investment in the Czech Republic were encouraging.
The Railway Workers' Union (OSZ) is ready to declare a strike if salaries are not paid to its members. The OSZ leadership already asked OSZ branches in individual companies to form strike committees. The next payday is October 15. OSZ chairman Jaromir Dusek said that the Union finds a single day of pay delay so serious that it would not hesitate to stop railways' operation without waiting. Dusek also said the OSZ leadership had come to the conclusion that Transport Minister Jaromir Schling was unable to guarantee any improvement of the situation. Schling conceded that he was missing money for Czech Railways in his ministry´s budget but assured the unions that he was defending their justifiable demands in the government.
Government agency CzechInvest attracted FDI worth USD 4.55bn to the Czech Republic from 1993 to end-August 2001 and completed 140 projects creating 44.7t new jobs. Germans were the biggest investors (USD1.17bn), followed by Benelux (USD 847m) and Japan (USD 787m). The favorite branches of foreign investors include car industry (USD 1.59bn), electronic and electrical industries (USD 1.42bn), chemicals and plastics (USD 521m), textile industry (USD 288m), and wood processing, paper and printing industries (USD 220m).
The Czech crown weakened on Tuesday morning against the euro due to prevailing uncertainty about the future development on world markets but recovered later and closed at 34.27/32 only slightly below the late Monday’s level of 34.20/24. Vis-a-vis the dollar, the crown was trading at 37.14/18 in late afternoon, nearly flat if compared to 37.16/18 late on Monday. Recent interest rate cuts by major central banks did not show significant impact on the foreign currency market.
- Bond prices continued to rise on Tuesday. ECB´s interest rate cut on Monday brought about strong purchase activity next morning concerning all maturities. In the afternoon, the bullish sentiment weakened, namely on the long end of the yield curve. The state 6.95/16 bond gained 70bps to 103.50/80, yielding 6.56/53 %. The state 6.75/05 rose 40bps to 103.05/35, yielding 5.72/63 %.
| Late on September 18 | bond yield | Late on September 17 |
| CZK/EUR | 34.27/32 | - | 34.20/24 |
| CZK/USD | 37.14/18 | - | 37.16/18 |
| State 6.75/05 | 103.05/35 | 5.72/63 | 102.65/95 |
| State 6.95/16 | 103.50/80 | 6.56/53 | 102.80/10 |
(Martin Kupka)