Pavel Mertlik’s resignation, announced yesterday morning, immediately resulted in the slight weakening of domestic equities, bonds and the currency. His deputy, Jan Mladek, and the National Property Fund head, Jiri Havel, also announced their resignations yesterday.
The resignations are negative news for Czech financial markets, since Mr. Mertlik enjoyed a reputation as a consistently pragmatic and no-nonsense finance minister. The resignations also mean that the pace of the privatizations of several listed blue-chip companies is at risk given that the privatization processes will be temporarily paralysed by the departures. Indeed, outgoing Deputy Finance Minister Mladek said that the delays could amount to several months, and added that the speed of the privatization of the telecom and power sectors would be affected. He reiterated that KB privatization should be completed in the third quarter of this year.
The key issue now is how quickly a new finance minister and a new NPF head will be appointed and on the attitude of the new appointees (there is no definite news on this front). A press conference on the issue of Mr. Mertlik’s resignation is to be held today at 10 a.m. CET.
So far, CEZ appears to be hit most, both by Mertlik’s resignation, and by Monday’s Cabinet decision to cancel the result of the privatization advisory tender.
(Ondřej Daťka)