Civic Democrats (ODS), Christian Democrats (KDU-CSL) and Greens signed coalition agreement on Thursday, December 28. New coalition consists of the government’s program, ministry’s diversification and coalition rules. It is still not clear when the president names the new government presented by current premier last week. Note that new cabinet has to ask for the parliamentary confidence in 30 days after designation. The premier stated that if the cabinet will not be able to carry out important reforms there should be an early elections. The new coalition agreement obligates the government not to support a construction of new nuclear capacities and preservers coal-mining limits.
Our view:
New coalition has same number of votes (100) like opposition parties (CSSD - Social Democrats and KSCM - Communists). There is speculation that the government could be supported by MPs which left CSSD club, but on the other hand there are couple ODS members which are not satisfied with personal composition of new government. If the cabinet fails in confidence vote, which we think is likely, there is the third attempt to form the government. We see the agreement regarding new nuclear capacities and coal-mining limits as negative for CEZ as these are crucial to meet increasing demand in the future.