The Lower House approved the state budget proposal for next year in the third reading yesterday. Finally, the state budget will begin without a stopgap as it happened last two years. The approved proposal calls for revenues of CZK 636bn, expenditures of CZK 685bn and thus the deficit should amount to CZK 49bn. Finance minister promised to lower the deficit to CZK 10bn in 2002 yesterday.
The cabinet agreed to recommend to the finance ministry and the ministry of industry to increase natural gas prices for households by 24.1% next year compared to a previously planned 10.7%. The higher price increase resulted from quickly rising world prices of natural gas and weakening of the Czech koruna against the dollar during this year.
The Czech koruna reverted Monday’s losses against the euro and raised to 34.79 late on Tuesday. Against the dollar koruna stood at 39.58 form morning’s 39.26.
It was another quiet day on bond market on Tuesday, however prices ended up slightly lower than openings. Not much trades have been done, just the longest government 6.40/10, the one reopened in auction on last Friday, have been on sell side. It's only a week and half until the end of this year's trading, historically a quiet period, however there are still a few things that could move the market, the first one being CPI figures released on Friday.
Current benchmark prices: MoF 6.75/05 99.00-30 (-10 bps), MoF 6.30/07 94.00-30 (-5 bps), MoF 6.40/10 91.85-15 (-15 bps).