PRAGUE, March 4 (Reuters) - The Czech parliament's lower
house voted on Saturday to slow an inflation-linked rise in
state pensions that has put increasing pressure on the budget in
a period of fast rising prices.
The government has said the budget will save nearly 20
billion crowns ($905.84 million) this year if the change is
approved by parliament by late March, ahead of the next pension
adjustment scheduled for June.
Saturday's move was the first sign of the government trying
to rein in the exploding budget deficit. The central state
budget showed a record gap of 119.7 billion crowns in the first
two months of 2023, due to soaring welfare payments and energy
price subsidies.
The pension adjustment bill, approved in a rushed procedure
and after a fight from opposition lawmakers, would limit the
rise in the average monthly pension to 750 crowns ($34) in June
in the next round of hikes to be triggered by inflation.
That would be instead of the 1,770 crowns dictated by
current legislation which orders annual pension hikes as well as
extraordinary adjustments when prices rise by 5%.
Inflation hit 17.5% year-on-year in January.
The opposition said that if the bill also wins backing in
the upper house and is signed by the president, it will
challenge it in the constitutional court.
State pensions have risen faster than wages in recent years.
The average pension was 19,440 crowns in January, up 30% over 14
months, the government has said.
With an ageing population and payments linked to inflation,
the Czech pension system is becoming increasingly costly and the
centre-right government has signalled changes including raising
the retirement age in the future.
This year's central government budget deficit is seen at 296
billion crowns, with the overall public sector deficit forecast
at 4.2% of gross domestic product by the Finance Ministry.
Apart from the pension adjustment, the government has
pledged to find savings and raise indirect taxes worth a total
of 70 billion crowns from next year to cut the budget deficit.
($1 = 22.0790 Czech crowns)
(Reporting by Jan Lopatka
Editing by Alexandra Hudson)
Messaging: jan.lopatka.thomsonreuters.com@reuters.net))
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