Press conference of Prime Minister of the CR Mirek Topolánek after the meeting of the government of the CR at the state chateau Koloděje

Press conference of Prime Minister of the CR Mirek Topolánek after the meeting of the government of the CR at the state chateau Koloděje on Monday 25th September 2006.

Radim Ochvat, secretary of the Prime Minister:

Good evening, ladies and gentlemen, welcome to the evening press conference after the meeting of the government. Let me welcome the Prime Minister of the Czech Republic, Mirek Topolánek, the Deputy Prime Minister and the Minister of Labour and Social Affairs, Petr Nečas, the Minister of Finance, Vlastimil Tlustý and the Ministry of Education, Youth and Physical Training, Miroslava Kopicová. I ask the Prime Minister Mirek Topolánek for his introductory speech.

Mirek Topolánek, Prime Minister of the CR: Thank you. As you have certainly noticed, I have nothing in a paper form, as we did no want this press conference to be longer that it is necessary. I would like to inform you of basic parameters of the approved draft of the state budget for 2007. The revenue side of the budget amounts to 966,7 billion crowns, the expenditure side amounts to 1058 billion crowns, which means that the deficit is 91,3 billion crowns. These figures will be specified after including financial means from the European funds, but it will have no influence on the deficit. As the operational space we had, owing to the budget draft made by the previous government, was very limited and minimal, we significantly strengthen some of the following budgetary items. We have found financial means for flue pandemic prevention and for modernization of the inoculative schedule of children in the heading of the Ministry of Health. We have significantly increased means for science and research by 1,5 billion crowns and for universities by 1 billion crown. We have also increased expenditures of co-financing of regional programmes of European funds by 1 billion crowns, as we had announced before. Significant increase was required for financing of impacts of the Act on Social Services, at the amount of further 4 billion crowns. We have increased expenditures of the Ministry of Agriculture by 2,5 billion crowns, expenditures of the Ministry of Interior by 700 million crowns and expenditures of the Ministry of defence by 539 billion crowns. Expenditures of the Ministry of Transport were increased by 1,5 billion crowns provided that 1,2 billion crowns of this amount will be used for financing of losses of carriers who provide public transport services and 300 million crowns will be used for financing of the Prague underground loss. In addition to it, we have strengthened some further headings on a smaller scale, e.g. the Ministry of Culture by 500 million crowns. In connection with the debate on the draft of the state budget, the government decided to start the sale of the part of the state share in the company of ČEZ up to the maximum revenue of 31 billion crowns, provided that only expenditures connected with implementation of investment actions in the sphere of infrastructure and projects concerning removal of environmental damage in the framework of approved privatization project are financed using these means. We have decreased the budget deficit by this amount. It is possible to say that positive changes occurred on the expenditure side of the budget and the increase of the unrealistic deficit approved by the previous government was minimal. To achieve this, we have cut expenditures especially in the sphere of current expenditures of the budget at the total amount of 6,4 billion crowns. This is all as an introduction; I could just add that an increase of budgetary means have occurred also at the Ministry of Environment, in spite of the fact that this increase is rather marginal in the context of total changes. Now I will give the floor to my colleagues, who will inform you in detail on their budgetary headings and on the total structure of the state budget.

Radim Ochvat, secretary of the Prime Minister: I give the floor to the Minister of Education, Youth and Physical Training, Miroslava Kopicová.

Miroslava Kopicová, Minister of Education, Youth and Physical Training: Thank you, I will not be talking too long. I think that I was given the floor as the first one, because I feel honoured that I was relatively or very successful in the course of the debate on the state budget; as you heard from the Prime Minister, the budget is very strict and I am glad that it was not difficult to get support of the Prime Minister and the Minister of Finance and for budget increase. As the Prime Minister said, it represents 1 billion crowns for universities and 1,5 billion crowns for science and research, it means for science and research at universities and at the Czech Academy of Sciences altogether. Thank you.

Radim Ochvat, secretary of the Prime Minister: Thank you. I give the floor to the Deputy Prime Minister Petr Nečas, now.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: I can just state that we succeeded in financing of a very important Act on Social Services in the course of the debate on the state budget and it will concen great number of our inhabitants with various handicaps, seniors, and so on. I want to emphasize that the draft of the previous government was based on financial means, which were lower by nearly 4 billion crowns in comparison with budgetary means used in this year. In spite of the fact that the consequence of coming this act in force is increase of expenditures, in fact, the performance of the government was very socially oriented and the government showed great solidarity, because in case of the Act on Social Services it concerns financial means that are aimed at the most disadvantaged persons and the government showed a great deal of responsibility.

Radim Ochvat, secretary of the Prime Minister: Thank you and as the last one the Minister of Finance has the floor.

Vlastimil Tlustý, Minister of Finance: Ladies and gentlemen, good evening. I said all the important matters at the press conference in the afternoon and you got the overall information just now. I am ready to answer your questions.

Radim Ochvat, secretary of the Prime Minister: Thank you. If it is so, I ask for your questions, please. Kamil Houska, televize Nova, please.

Kamil Houska, televize Nova: I would like to ask the Prime Minister, what his assessment of those 91 billion crowns is, whether he deems it as a success in connection with the original draft, or whether it is a bad news for this country.

Mirek Topolánek, Prime Minister of the CR: It is quite evident that unless a government with a mandate is here, which would take reform measures, then similar budget can be predicted for the next year and the next but one year and we will never meet the Maastricht criteria regarding the coming of the Euro. We have inherited a budget, which was compiled wrongly and on its expenditure side there were many items, which were either nonsensical or unrealistic. We said we would prepare proper budget and it is necessary to say that certain steps were not simple at all, it was not simple to decide on them and we wanted to strengthen especially those headings, which were either underestimated or those that are connected with our priorities. So, I deem the budget as realistic at the moment and I suppose it is a maximum, which was possible to achieve in the framework of the budget prepared by the social democracy.

Petr Nečas, Deputy Prime Minister and Minister of Labour and Social Affairs: I would just add information that is really realistic and proper budget, because that one, which had been prepared by the previous government, is necessary to call as very untrue, as it did not respect the methodology ESO and the Act on Budgetary Rules. We took into account all these matters and we have above all ensured financing of those means that result from our laws. Even in the social sphere is shown that the previous government did not involve certain expenditures resulting from our laws. But the government did not resign and have taken certain not very popular measures; it means that certain limits were set in the sphere of current expenditures. We were talking here in the afternoon together with the Minister of Finance about it, it means about spending of so called reserve funds, but also about sphere of investments in the area of administrative buildings and so on. It means that we did not try to adopt passively the budget, which had been submitted in the past; we have restructured it for the benefit of socially disadvantaged people, for the benefit of science and research and we also was not afraid of taking certain steps aimed at cost reduction.

Radim Ochvat, secretary of the Prime Minister: Thank you. Further questions, please. Mr. Takáč, Česká televize.

Daniel Takáč, ČT: Good evening, can you say in more detailed manner where you had cut current expenditures and at which ministries?

Vlastimil Tlustý, Minister of Finance: So, my colleagues already mentioned it. In today's Government Resolution we decided to cease construction of administrative buildings, which were planned within the individual budget headings, it is a saving without doubt. Furthermore, we decided to maintain current expenditures concerning central organs, like ministries, at the level of this year, it means that no increase will occur next year. This was the second significant measure. As we mentioned here at the previous press conference, we decided to freeze drawing means from reserve funds, which were at disposal for ministries in the next year. We also charged the respective ministries to consider consequences of the Labour Code, as it is very difficult to estimate them. It is just evident, and we mentioned here too, that they will have certain impact on the individual headings, but we left responses to the individual ministries. In other words, the individual ministries will have to face consequences of this law.

Radim Ochvat, secretary of the Prime Minister: Further question, please.

Journalist, Reuters: I would ask a question the Minister of Finance. Minister, how high public finances deficit does this deficit represent and what do you propose?

Vlastimil Tlustý, Minister of Finance: 4% of the GDP and, we have also mentioned it but I will repeat it again, we have involved privatization revenues of the privatization of a part of shares of the company of ČEZ in the state budget for the next year and these 31 billion crowns are included in the total balance, which I have mentioned, i.e. 4% of the GDP is the deficit for the next year.

Radim Ochvat, secretary of the Prime Minister: Thank you, further question, please. Mr. Houska

Kamil Houska, televize Nova: I would like to ask a question regarding the ČEZ. The social democrats say that it is disadvantageous now for the state and that this is the reason why they prefer to privatize part of the Letiště Praha (Prague Airport). Could you say something concerning this?

Mirek Topolánek, Prime Minister of the CR: First, I must say that it is very strange if somebody wants to privatize the state-owned enterprise Letiště Praha without any preparation. According to our estimate 9 – 12 months will be necessary for transform the company to the joint stock company, for selection of advisors, etc. in case nothing extraordinary occurs. We will start actions, we do not resign. But we can hardly include these revenues into the budget for the next year, it would not be correct. In case of those 31 billion crowns, where we want to use part of the state share on the company of the ČEZ, it is not still decided on the way and therefore it is useless to speculate about it, because two or three ways exist how to do it and one way at a minimum does not endanger revenues of the state in such a way, which is presented by the social democracy. I regard the hurry-scurry sale of the Letiště Praha as very strange. Based on the analysis that was made and which is at our disposal, we concluded that those revenues cannot be included in the state budget for the next year.

Vlastimil Tlustý, Minister of Finance: I just add, in case members of the social democracy were serious about privatization of the Letiště Praha, the state-owned enterprise would have already been transformed to the form of a joint stock company. Notice the contradiction; they are speaking about sale of minority share of the enterprise and the enterprise is not a joint stock company.

Mirek Topolánek, Prime Minister of the CR: Perhaps one more piece of information, which was not mentioned here and which has no connection with the state budget, but it is connected with the previous question. I remember times when only telephone calls between politicians and some members of the Council for the Czech Television caused the television crisis. I think it would be good if you ask Mr. Paroubek, how it is possible that members of the Council of the Czech Television and members of the Council for Radio and Television Broadcasting are carpeted by a chairman of a party, which is not governmental party. It may mean an attack on this television or removal of the director. I just speculate nevertheless it happened and I would be very glad if you pay attention to this.

Radim Ochvat, secretary of the Prime Minister: Thank you, further question, please. Mr. Takáč.

Daniel Takáč, ČT: May I revert to the budget once more? One thing, part of money that you will gain ... inarticulate...

Mirek Topolánek, Prime Minister of the CR: Regarding the first question. We do not relinquish the privatization steps; nevertheless our long-term intention to allocate these privatization revenues to the pension reserve fund is still valid and therefore we do not want to improve state economy using those means. With the draft of the state budget which had been prepared in this way it was not possible to cover those 31 billion crowns in other way than using privatization revenue. It is quite evident. And I will answer also the second question, we agreed on the tripartite meeting yesterday that the wage increase will be 5% and it is still valid. Nevertheless, it is also true that the current expenditures of the respective headings of the state budget will be at the level of 2006. But we do not say that it concern only wages, but all the current expenditures of ministries.

Radim Ochvat, secretary of the Prime Minister: Thank you. Further question, please.

Journalist, ČTK: I would like to ask a question regarding these wages. So, the government approved increase of wages for state servants?

Mirek Topolánek, Prime Minister of the CR: I think that it is an agreement with our social partners. It is not a role of the government tot approve wage increase.

Journalist, ČTK: But money comes from the state budget.

Mirek Topolánek, Prime Minister of the CR: It is included within current expenditures of the individual budget headings.

Radim Ochvat, secretary of the Prime Minister: Thank you, further question, please. If there are no other questions, thank you and nice evening.