It seems as the UMTS licenses have turned to a cash-cow, at least in politicians' minds. Parliament now wants the Cabinet to cover losses of failed credit unions from the sale of licenses. Meanwhile, the Cabinet had already "distributed" the expected CZK 20 bil. among its ministries. All this at a time when not even the method of sale was chosen…
Parliament was more attentive to the government in a case of bonds that should compensate farmers for this year's drought (reportedly, harvest will fall 6% this year…) and another for floods. Dangerous country, the Czech Republic!
The opposition Freedom Union keeps fighting and submits another proposal to keep CZK 100 bil. of privatization revenues for future pension reform. Parliament refused a similar proposal asking for CZK 200 bil. earlier this week.
The Czech koruna returned to its favorite range as it strengthened to 35.36 CZK/EUR late on Wednesday. Last week wakening to 35.6 CZK/EUR is forgotten and the koruna rallies back. The dollar, though, is too strong even for the koruna and it gained further to yet another record 41.84 CZK/USD. The market now expects today's number on foreign trade balance. Markets did not pay any attention to the IMF's director claim that the euro is sharply undervalued and that an intervention might prop it up. Interesting, the IMF recommends a currency intervention, even though it was often skeptical about interventions. Times are changing?
(Ondrej Schneider and Dalimil Vyskovsky)