TNBiz (TNBiz)
Laws  |  October 10, 2012 11:20:05

The government approved the financial institution, should avoid excessive government debt

PRAGUE (MEDIAFAX) - The new constitutional law on fiscal responsibility, which enjoins the government to public debt exceeding 50 percent of GDP ask the parliament for a vote of confidence, the cabinet approved Prime Minister Petr Necas (ODS). Mediafax agency on Wednesday said a source familiar with the negotiations.

"The main objective of the draft constitutional law is to achieve sound and sustainable public finances, the Czech Republic, to provide it with sufficient decision-making in the implementation of the budget and fiscal policy and ensure compliance with international obligations," says the explanatory memorandum of the Act, which had previously recommended to accept a Legislative Council government under the leadership of Deputy Prime Carolina Peake (PEOPLE).

Once the amount of debt of the Czech Republic has risen to 50 percent of GDP, the government would have to ask the Chamber of Deputies for a vote of confidence. Active approach but constitutional law presumes since exceeded the limit of 40 percent of GDP. From this value would give state guarantees on the basis of applicable law on the date of the debt or the laws, to be approved by a simple majority of all members of Parliament.

If debt stood at 45 percent of GDP, the government would have to strive to reduce costs and provide Members draft budget, which should make maximum as large as the previous spending. State officials would reduce the salary base by a fifth next year, would also freeze pay for workers in public institutions. At these values ??should remain until the debt again falls below 45 percent of GDP.

In the event that the debt amounted to sums between 45 and 48 percent of GDP, the government would have to submit only balanced the budget proposals or profit. The exception in the following steps should governments year after a vote of confidence from Parliament.

Counties and other local authorities should manage so that their debts do not exceed 60 percent of their average total income for the last four years. If they do not succeed, they may give the state less money from taxes. "Detainee income tax for a local authority may be released only to repay indebtedness territorial self-signed before the year in which they were arrested," said law by Finance Minister Miroslav Kalousek (TOP 09).

The law allows for the creation of the National Council of the budget that gets on salaries and operation of 50 million crowns per year, its members, including the President and Vice President will be elected by the Chamber of Deputies.

The new constitutional standard should begin when the passage of the legislative process in 2014. The exception will be if approved health insurance, which would by law have to translate well balanced budgets, and they should act established new responsibilities since 2018, as well as the ability to withhold taxes from government units.

According to the Czech Statistical Office was government debt last year, 40.82 percent of GDP. For the adoption of the euro debt must remain below 60 percent of gross domestic product. Since it is a constitutional law will need to take it three-fifths votes of lawmakers.

Jan Drahorád,

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Vláda odsouhlasila finanční ústavu, měla by zabránit přílišnému zadlužení státu

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