Nascent Czech Government Pledges Cheaper Beer, No Euro Adoption

(Bloomberg) -- Two Czech parties that have proposed working together in a ruling coalition pledged to keep the country out of the euro area, boost investment in roads and retirement homes and cut taxes on some services, including sales of draught beer.

After maneuvering for six months following inconclusive elections, caretaker Prime Minister Andrej Babis’s ANO party and the Social Democrats published a draft declaration outlining their potential minority government’s priorities through 2021. The Social Democrats have yet to hold a party-wide referendum on the tie-up and, if the party affirms, the coalition will seek a parliamentary vote of confidence.

Nascent Czech Government Pledges Cheaper Beer, No Euro Adoption

In the document, published by the CTK news service late on Thursday, the two former coalition partners pledged not to pursue euro membership because they want to keep the country’s independent monetary policy and avoid the costs and economic risks associated with the single currency. The nation, which overwhelmingly relies on the euro area for exports and foreign investment, pledged to give up the koruna when it joined the European Union in 2004, but the accession treaty stipulates no deadline for the switch.

“The government currently doesn’t see the possibility of adopting the common European currency,” ANO and CSSD said in the statement. “However, we will actively participate, to the maximum possible degree, in the current discussions on the EU’s deepening economic and monetary union, with an emphasis on consistent observance and enforcement of budgetary responsibility on the level of individual euro-area member states.”

Anti-Refugee Pledge

The document starts with a pledge to fight the EU’s mandatory refugee-relocation program -- a topic that spawned anti-Muslim rhetoric in pre-election campaigning. The other priorities include spending more money on highways and other infrastructure, raising pensions and teachers’ salaries, streamlining and digitalizing public administration, as well as lowering the value-added tax for some businesses, including restaurants, hairdressers, and household helpers. It also vows to maintain the country’s low debt burden.

ANO and Social Democrat leaders reached a preliminary coalition deal on Monday, ending a stalemate that followed after Babis won last year’s parliamentary election but lost a confidence vote in January with a single-party cabinet. While most mainstream politicians are against teaming up with the second-richest Czech because he is under investigation for fraud, Babis’s ANO last month refused to seek support from a far-right party that wants the country to leave the EU.

Babis told the Hospodarske Noviny newspaper in an interview published Friday that leaving the EU would be a “big economic disaster.”

“We must explain to our people that we are economically dependent on the EU,” he said.

ANO and the Social Democrats have a combined 93 lawmakers in the 200-member lower house of parliament. They are holding talks with the Communists, who have 15 seats, to help the minority administration pass a vote of confidence.

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