As expected the ODS minority Government resigned yesterday as it did not receive confidence in the Lower House on October 3. The President has to name the same/another person to form a Government but will do so after senate&communal elections on October 21-22. Until the new Government is appointed the current remains in power.
Our view:
We continue to see two outcomes: (i) early elections – ODS will be again asked to form a Government, which would be a technocratic one bringing the country into new elections in the 1H07. This could be supported by all parties including the Communists; subject to conditions of not selling CEZ and maintenance of Social benefits; except Social Democrats (CSSD) and (ii) CSSD would get a chance to form a Government mostly likely in the 3rd attempt, which may succeed given the fact that three members of Christian Democrats (KDU) abstained from the previous confidence vote. This would allow CSSD to win the confidence assuming full support from CSSD and the Communists.