Two CSSD members, Mr. Pohanka and Mr. Melcak that left their political club during the over 7-month stalement publicly announced that it is necessary to end the agony and will allow second ODS government to came to power on Friday, January 19 when the confidence vote takes place. Pohanka and Melcak decided to leave parliament during voting which would give the centre-right Government enough votes (100:98) to win the confidence. The trade off for the support is that the new government will implement some program concessions in the social area.
Finally the political sky seems to be clearing after long months of negotiations and obstructions. Pointing out the main implications for Czech stock we would highlight that the political program includes no extension of mining limits, neither support for new nuclear blocks to be build , nevertheless, both CSSD and ODS support it suggesting further discussions. However, CEZ shall continue preparing plans to build two additional 660 MW nuclear blocks. The Government plans to decrease corporate taxes from 24% to 17-19%, which would obviously help on NI level for companies based in Czech Republic. There shouldn’t be any significant impact of new government on banks, for PMCR the situation will help to better foresee next excise tax hike increase in January 2008. Orco and ECM could benefit from continuing lower VAT should this bill be passed. Health sector will continue to experience some turbulences as ODS is pushing for lowering the reimbursement, payments in pharmacies and hospitals, however these steps are not as social as Pohanka and Melcak would expect and may experience problems in passing them going forward.