The Czech government has approved extending a €1.5 billion (approximately Kč 38 billion) to the IMF, principally to help enable the fund to provide bailout cash for indebted Eurozone countries. The approved size of the loan — half of what the EU had wanted from the Czechs — was proposed by Finance Minister Miroslav Kalousek.
The EU had called on Prague to put up €3.5 billion while some in government wanted to contribute nothing at all or put it to a referendum. In his written proposal for the government to approve the €1.5 billion loan, Finance Minister Kalousek (TOP 09) said it would be “immoral” for the Czech Republic not to extend the loan given the fact that the country has drawn Kč 176 billion from EU funds since 2004.
The government will now recommend that the Czech National Bank (ČNB) provide the loan from its cash reserves. If the central bank agrees, the government will provide it with guarantees against devaluation or write off, and compensate the ČNB for estimated missed profits had the money being invested.
According to Czech Television (ČT), the government also provisionally approved signing up to the EU’s fiscal discipline agreement — the details of which are being finalized by the EU member states’ finance ministers in Brussels — but agreed to wait until all the points are known before putting it to parliament.
It appears almost certain that the fiscal discipline agreement, which the leaders of countries with the euro hope will be signed at the summit of EU leaders on Jan. 31, would require a constitutional bill in order to be ratified by the Czech Republic, because it will lead to certain powers over sovereign decisions being granted to EU institutions. Such laws require a two-thirds majority in parliament and the Czech Constitution imposes no time limit upon the president within which to sign or reject the legislation.
President Václav Klaus has made it clear that he will not sign any law granting the EU new powers over sovereign affairs. Among other points, the draft agreement contains a rule whereby signatory states will be required to submit draft budgets to the European Commission for approval before putting them to national legislatures.
See previous article: Czech Finance Minister to propose lending Kč 38 bln for euro bailout
