Books on Czech Republic
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Update No: 091 - (26/11/04)
The EU constitution approved; but still referendum expected
The Czech government in October approved the draft European constitution and
decided that Prime Minister Stanislav Gross and Foreign Minister Cyril Svoboda
would sign the document at the ceremony in Rome.
President Vaclav Klaus, who has been very critical of the document, refused to
sign it. The ratification process of the document has not been decided as of
yet, but it is expected that a referendum on the draft will be held.
The Czech Republic does not have a law on a general referendum although this has
been a priority for the government for some time. So far, the referendum on
Czech accession to the EU has been the only referendum held in the Czech
Republic and it was established by a special law.
The timing of the referendum has not been agreed to either. Gross has said he
would like to see it with the probable parliamentary elections in the spring of
2006, while Klaus wants it separated so that pre-election propaganda does not
confuse voters and they have access to information about the constitution.
Smaller lead for Czech Civic Democrats
The opposition Civic Democratic Party (ODS) is still the top political
organization in the Czech Republic, according to a poll by STEM. 28.2 per cent
of respondents would vote for the ODS in the next parliamentary election.
The ruling Czech Social Democratic Party (CSSD) is in second place with 18.3 per
cent, followed by the Communist Party of Bohemia and Moravia (KSCM) and the
Christian and Democratic Union - Czech People's Party (KDU-CSL).
In the June 2002 ballot, the CSSD elected 70 lawmakers to the 200-member Chamber
of Representatives. On Jul. 1, prime minister Vladimir Spidla resigned from his
post following a poor showing from his party in the Jun. 13 elections to the
President Vaclav Klaus appointed 34-year-old CSSD interim leader Stanislav Gross
as prime minister on July 26. Gross-who had acted as the country's interior
minister-now leads a coalition government, which also includes the KDU-CSL and
the Freedom Union - Democratic Union (US-DEU).
On Nov 5 and 6, Czech voters elected a third of their Senate's 81 seats. The
next election to the Chamber of Representatives is tentatively scheduled for
Economic good news
The Czech economy has been picking up speed in recent months. Gross domestic
product in the second quarter of the year rose at a year-on-year rate of 4.1 per
The Czech Republic posted a trade surplus of US$129m in September, the biggest
trade surplus since April, official figures have showed.
The surplus was also the highest for the month of September in a decade. Exports
were up 20.8 per cent year-on-year while imports rose by 18.7 per cent.
The statistical office said the September figures were driven by a strong
surplus with other members of the European Union while the rising price of oil
had pushed the trade balance with countries outside the European Union into
Analysts said the data would probably lead to a firming in the Czech currency,
the crown, and would probably boost gross domestic product growth in the third
quarter of the year.
Czech airlines to buy 12 passenger jets from Airbus
State-controlled Czech Airlines (CSA) said on October 15th it would pay nearly
US$500m for 12 Airbus passenger jets to replace older Boeing jets as part of a
fleet modernisation programme, Deutsche Presse-Agentur (dpa) reported.
CSA directors awarded a contract to the European consortium Airbus for six A320
and six A319 jets, to be delivered between next spring and 2008. The aircraft
will be leased in a deal worth between 10bn and 12.5bn Czech crowns (US$393m to
US$492m), CSA said. The flagship carrier rejected a bid from Airbus' US rival
Boeing, although the airline could buy Boeing jumbo jets in the next few years
when it begins replacing its Airbus A330s for long-haul flights. CSA chief
executive, Jaroslav Tvrdik said the winning bid provided "the best economic
direction for Czech Airline's modernisation," noting that Airbus
supplemented the package with a free flight simulator worth 300m crowns. Over
the next 10 years CSA plans to expand its fleet to 63 aircraft, from the current
43, and replace its 30 Boeing 737 jets.
Indal to invest in Czech Republic
Spain's Grupo Indal holding company plans to invest €10m (315m Czech crowns)
in a new plant for lighting technology in the Czech Republic, Interfax News
Agency reported recently.
Over the next 3 years, the project should create 100 jobs. The holding is in the
process of choosing a location for the plant, having narrowed the choices to 3.
The Czech Republic would become the starting point for Grupo Indal's further
expansion in the Central and Eastern European regions. Grupo Indal chose the
Czech Republic for the plant because of quality and availability of suppliers,
skilled labour force and favourable geographic location. The firm plans to
gradually shift to the Czech Republic, production of lighting fixtures demanded
by clients in the region.
CRa requests buyout approval
Czech telecommunications firm and radio and TV signal transmitter, Ceske
radiokomunikace (CRa), has asked the Securities Commission (KCP) for approval of
a public buyout of CRa shares at 440 Czech crowns apiece, Finance Ministry
spokesman, Marek Zeman, said, Interfax News Agency reported recently.
The request stems from a decision made during an October 15th extraordinary
general meeting. The details, including those of financial settlement, will be
announced after the KCP gives its approval and the offer is expected to be
binding for approximately 4 weeks. CRa has withdrawn from a deposit agreement,
for traded securities with the Bank of New York, made in June 1998.
Cesky Telecom sale via capital markets
A ministerial commission overseeing the privatisation of Czech
telecommunications company Cesky Telecom (CT) has recommended to the government
that it sell a 51 per cent stake on the capital markets, the National Property
Fund (FNM) spokeswoman, Petra Krainova, said recently, Interfax News Agency
She said the commission also took into account a recommendation from the
consortium of consulting firm Credit Suisse First Boston and Czech bank Ceska
sporitelna, which is acting as sale adviser.
Privatisation options for CT include a direct sale to a single investor, sale on
capital markets, or a combination of the two. The government should decide on
the method for CT's sale in November, but ministers' opinions on the
privatisation diverge. Deputy Prime Minister for Economy, Martin Jahn, has
proposed selling CT on capital markets, while IT Minister, Vladimir Mlynar
favours a sale to a group of telecommunication companies and financial
Prime Minister Stanislav Gross has said he would like to sell the company on the
stock exchange provided the income is not considerably lower than proceeds from
a direct sale. Analysts said CT's sale should generate 50-65 billion Czech
crowns in revenues for the state. The government has already included the sum in
next year's state budget. Potential bidders for CT include Denmark's TDC with
Goldman Sachs, Vodafone, Orange and Czech financial investors, Apax Partners,
Blackstone Group and CVC Capital Partners. CT netted 4.5 billion crowns in
January-September 2004, a 22 per cent year-on-year increase largely attributable
to its mobile subsidiary, Eurotel, the company announced on October 27th.
CT, which became the 100 per cent owner of Eurotel last December, saw its
consolidated sales rise 24 per cent year-on-year to 46.5 billion crowns.
Analysts had actually predicted a 26 per cent increase in profit and a 25 per
cent rise in sales. Eurotel's sales rose 2 per cent to 21.9 billion crowns in
the monitored period. CT operated 3.4 million fixed-lines in September, down 5
per cent year-on-year. Eurotel has 4.36 million clients, a 9 per cent increase
over the third quarter of 2003.
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