Make Kitco Your Homepage

Czech government moves to ratify EU fiscal compact

Kitco News

PRAGUE, Feb 14 (Reuters) - The Czech government agreed on Wednesday to seek ratification of the European Union's fiscal compact on budget stability.

The Czech Republic is among the last EU member states yet to adopt the fiscal pact, which places limits on deficits and debt, intended to protect the euro single currency. Prague, which has not adopted the euro, has long met the pact's fiscal targets but had held back from ratification.

A previous Czech government approved the fiscal compact in 2014 and it was ratified in the upper house of parliament, but not in the lower house. The previous Czech government determined that it would need a three-fifths majority in the lower house, but the new government of Prime Minister Andrej Babis decided it would require only a simple majority.

"The government approved the fiscal pact. We are the last EU country that has not approved it yet," Babis told reporters after a regular government meeting.

"We accept fiscal stability," he said "We have not accepted (the parts) which assume entering the euro zone, we don't want that."

Parliament of the EU's newest member Croatia gave its nod to the compact in January with just the president's signature missing now. The only other EU country that has not adopted it is Britain, which is leaving the bloc next year.

Babis led a campaign critical of EU policies on migration and other issues ahead of an election last October but has since tried to dispel the image of Czechs as one of the most eurosceptic nations.

Signatories of the compact are obliged to keep their budget in balance or surplus with a structural deficit below 0.5 percent of the gross domestic product under normal conditions.

The Czechs, like other non-euro zone members, do not have to adopt clauses containing penalties for missing the fiscal targets. These would kick in only with adopting of the single currency, which Babis has rejected repeatedly.

Babis's minority cabinet lost a confidence vote last month but remains in office while he tries to form another administration.

(Reporting by Petra Vodstrcilova; Writing by Robert Muller; Editing by Peter Graff)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.