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Czech Government Faces Confidence Vote as Austerity Bites

The Czech Republic's government faces a confidence vote in parliament on Friday, the latest European government to face protest over tough spending cuts and unpopular measures needed to cut the country's budget deficit back below 3 percent of gross domestic product.

PRAGUE, CZECH REPUBLIC - SEPTEMBER 11: Thousands of people pay tribute in front of the portraits of Lokomotiv Yaroslavl and Czech National Ice Hockey Team players Jan Marek, Karel Rachunek, Josef Vasicek during a mourning ceremony at the Old Town Square on September 11, 2011 in Prague, Czech Republic. The Yak-42 plane carrying the Lokomotiv Yaroslavl ice hockey team crashed on September 7, 2011 after take off near Yaroslavl. The crash killed 43 people of the 45 aboard including the three Czech p
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PRAGUE, CZECH REPUBLIC - SEPTEMBER 11: Thousands of people pay tribute in front of the portraits of Lokomotiv Yaroslavl and Czech National Ice Hockey Team players Jan Marek, Karel Rachunek, Josef Vasicek during a mourning ceremony at the Old Town Square on September 11, 2011 in Prague, Czech Republic. The Yak-42 plane carrying the Lokomotiv Yaroslavl ice hockey team crashed on September 7, 2011 after take off near Yaroslavl. The crash killed 43 people of the 45 aboard including the three Czech p

Maya Bhandari, director of global market strategy at Citi says the government will survive the vote of confidence, and stresses that the Czech Republic’s fiscal dynamics are solid.

"They will have the 102 votes necessary" to pass the vote, Bhandari told CNBC's 'European Closing Bell'. "But I think there is a very important point here with the Czech Republic, that unlike the likes of Spain and Greece, the Czech Republic’s problem is not about fiscal sustainability but much more about coalition politics."

Leaders of the 3 Czech parties that form the government agreed to dissolve their coalition. Prime Minister Petr Necas had pushed for the break-up after a lawmaker from the Public Affairs party, one of the three parties that make up the governing coalition, was convicted of paying bribes but refused to step down from his parliamentary seat. Necas said if the government loses the vote he would seek to dissolve parliament in May and hold elections in June.

Almost 100,000 people protested against cuts in Prague at the weekend in one of the biggest anti-government demonstrations since the collapse of communism in 1989.

Bhandari said the Czech Republic’s problems should be put in context.

"If you look at the debt-to-GDP which is 44 percent or you look at the fiscal deficit which is 3.1 percent, it certainly looks a whole lot better than a lot of western European countries," she said. "I think it is important to put this no confidence vote and what is going on in Czech Republic in the context of the solid fiscal dynamics."

Contact Europe: Economy

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