May 25, 2009, 17:06 GMT
Prague - The interim Czech government agreed Monday that the country's budget gap should not exceed 170 billion koruny (8.9 billion dollars) in 2010, Czech Prime Minister Jan Fischer said.
Such a budget deficit would amount to some 5 per cent of the country's gross domestic product (GDP), Fischer said.
The Fischer-led caretaker government would freeze wages in the public sector as well as cut spending by ministries in order to squeeze the gap under 170 billion koruny, Finance Minister Eduard Janota said.
The planned deficit, reflecting the global economic crisis, mars prospects for an early adoption of the euro, as the European Union requires candidates to keep the deficit gap under 3 per cent of GDP.
The meltdown on the world's financial markets has largely bypassed the Czech Republic, but its export-reliant economy has been hit by falling foreign demand. The Czech economy contracted by 3.4 per cent in the first quarter of 2009, according to a preliminary estimate by the Czech Statistical Office.
The interim cabinet, which took over on May 8, is to govern until early elections in mid-October. Drafting the state budget belongs to its main tasks, along with completing the country's six-month rotating presidency of the EU, which ends June 30.
The 2010 budget, however, is not set to be approved until after the new parliament takes power.
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