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Interim Czech govt won’t set euro adoption goal : PM

PRAGUE - Czech prime minister-designate Mirek Topolanek said on Sunday that an interim administration he is trying to form would set no formal target date for the adoption of the euro as the country’s currency.

A three-month-old political deadlock has all but crippled policy-making in the country, fanning investor concerns that its current goal to adopt the euro by 2010 is in jeopardy because of a widening budget deficit.

Conservative leader Topolanek wants to ask President Vaclav Klaus by Friday to appoint his interim cabinet, which he wants to lead the country into early elections next year to put an end to the political instability that has persisted since an inconclusive general election in June.

Asked in an interview on Czech Television whether the agenda of his planned government would include any commitment to adopt the euro by a certain date, Topolanek responded: ‘Definitely not.’

Topolanek, head of the rightist Civic Democrats, reiterated his party’s view that the 2010 euro adoption goal -- increasingly seen by financial markets as infeasible -- could not be met without prompt fiscal and labour market reforms.

He said his interim administration, if appointed, could start some reforms upon agreement with other parties, but it could in no way make any fundamental adjustments before an early election, which he wants to call in the spring of 2007.

The Czech Republic, a star economic performer among new EU members, could face a public finance deficit of 3.8 percent of gross domestic product without cuts in bloated social and welfare spending, Finance Ministry officials have said.

Such a gap would breach the European Union’s fiscal rules allowing a deficit of no more than 3 percent of GDP and blow apart the outgoing government’s gradual deficit reduction plan aiming to secure euro zone entry in 2010.

Topolanek wants to gain all-party support for a government with a limited mandate after failing to form a stable, full-term cabinet with the backing of either rightist or leftist parties.

Both rightist and leftist parties control equal numbers of seats in the 200-member lower house of parliament and have so far failed to agree on any government, raising the prospect of fresh elections.