Press Conferences

18. 2. 2009 12:48

Press Conference – Introducing the National Anti-Crisis Plan – 18 February 2009

Jana Bartošová, spokeswoman for the Czech government: Good day, ladies and gentlemen, please allow me to welcome you to the press conference where we would like introduce the government's National Anti-Crisis Plan. Of course the members of NERV [the Government's National Economic Council] cooperated on it; they're sitting here in the front row. I will introduce them later. I would like to welcome the prime minister, Mr. Mirek Topolánek, the deputy prime minister and minister of labour and social affairs, Mr. Petr Nečas, the deputy prime minister and environment minister, Mr. Martin Bursík, the finance minister, Mr. Miroslav Kalousek, and the minister of industry and trade, Mr. Martin Říman. As I've said, members of NERV are here; Mr. Tomáš Sedláček, Mr. Michal Mejstřík, Mr. Miroslav Zámečník, Mr. Vladimír Dlouhý and Mr. Jiří Schwarz. Good day to you as well. Mr. Prime Minister, I would like to ask you for the introduction.

Mirek Topolánek, Prime Minister of the Czech Republic: Thank you. I would like to publicly thank the members of NERV, the Government National Economic Council; at least half of its members are here, and they have already been introduced. Without them, it would have been very complicated to create these materials and it would not have had an expert foundation. As you must have noticed, most of the recommendations that NERV gave to the government have in the end been respected. Even if today the first order of business is to present the very specific steps we are preparing, please allow me to say a few more words in general. I would especially like to emphasise that despite this being a government plan - and the government is required to present it as part of its constitutional responsibilities - in no way do I think these are materials that have been tinted in any way by ideology, and are in no way politically motivated. What bears witness to this is that the European Commission, after being familarised with our plan, found it good, potent and effective. Maybe Mr. Minister Kalousek can say something about that.

In a time of financial crisis and such impacts on the economy, there aren't that many effective and correct recipes for a solution available. This corridor is very narrow. There isn't any room for any political adventurism, for any easy populism, or irresponsible experiments that solve nothing and only increase debt and factually weigh down the economy in the long term. We have tried to approach the solutions to this problem with maximum responsibility. We have contacted experts, heard their advise, and have not been limited by any strict political orders. I can say absolutely authoritatively that the ministers have approached this plan without personal ambitions, and have contributed rather as experts, and have contributed to this discussion only when they had something pertinent to say. In no way was this a political discussion.

In choosing experts, we selected the widest spectrum of opinions. We called on experts who in the past advised some of the previous finance ministers, such as Finance Minister Bohuslav Sobotka. Actually two former Social Democrat ministers. For us, it was about choosing the best expert and pertinent solutions. Never anything that was ideologically pure. I believe the opposition will appreciate our openness, and I, the members of the government and I'm convinced that the citizens of the Czech Republic will certainly welcome their openness. At this moment, the public expects neither a display of political competition nor a variety of ideas as much as the ability to come to agreement, because it is necessary to act quickly. There aren't many of these prescriptions, and they are not divided into leftist and rightist prescriptions, but good and bad ones. We have tried to collect the good ones, including from the recommendations proposed by the ČSSD [Social Democrats], and we are trying to create an organic whole, so that the measures will be mutually tied to each other, will strengthen each other. With full responsibility I say here that this plan will help to mitigate the impacts of the economic recession - because none of us thinks we should be able to command the wind and rain – and this crisis, from the government's viewpoint can only be forestalled.

I expect a serious debate in the parliament over these materials. You know that this was to have begun this morning, but the MPs decided otherwise, so this press conference, unfortunately, precedes the discussion in parliament. We don't want to hammer political capital out of this. We hope our other colleagues will do the same. It is not in our power to stop this crisis. We can only limit the impacts, as I've said, and partially eliminate the loss of jobs. But with erroneous measures we can also prolong this crisis and deepen it if we give precedence to any negative pre-election campaigning, which would increase the crisis of confidence that exists. This crisis is a crisis of confidence. I would like for us to be able to win more as a whole than for each of us to lose as individuals.

Let's go to the first slide.

I think this plan is very socially sensitive. The strongest measures will go to assist the middle and low income groups of the population. It's the cuts in insurance premiums that will help them the most. We don't want to give more social benefits to people who lose their jobs, but the goal is to preserve their jobs. We believe this will be a much more effective and dignified way, for not only people and companies, but for the government as well. The second principle on the basis of which we prepared these proposals is that this plan is founded on freedom, and not on the principle of more for the state. I'm glad it's that way. I think the measures that have been recommended, whether by global institutions or the European Commission, show that the way out of the crisis does not go through higher taxes and increased state interference into daily life. As part of these measures, we have rather tried to decrease the general tax quota. I can venture to say that this plan is smart and interconnected. We would not have to be embarrassed about these steps even in better times. They are not non-systemic steps. They should not harm us in the long term. They have a strong leveraging effect, connecting in a very meaningful way the private sector and structural funds. They have a strong multiplier effect, which can be seen also in the fact that according to ESSA 95 methodology, the impacts on the budget are around 2 %, as we will show later. Stimulus to the Czech economy will be nearly 5 %, which means 4.7 % of GDP. ¨

Next slide.

This plan is not populist. Our economy is suffering the most from a decline in foreign demand, not domestic. I think by now everybody understands this. Czech demand has never been the strongest motor of our economy. The Czech economy will not be helped therefore by stimulus to domestic demand. Any form of handout of public funds in such a small, open economy, which is 80 % dependent on imports, would of course end abroad. It would only be throwing money away. Instead of easy stimulus to domestic demand, we concentrated on the supply side of the economy. We are supporting employment, hard work, making it easier to do business, decreasing the tax burden, and supporting what has always worked - export performance. Our plan is preventive. Instead of increasing unemployment support, we are trying to avoid the loss of jobs. We are cutting the cost of labour, saving jobs. Cuts in insurance premiums, as were said in the press conference after the government meeting, and this is retroactive to 1 January, are precisely the tool that can help to keep jobs in industry, agriculture, construction and services. The steps also contribute to the creation of additional job opportunities, even if they are part-time. With this plan, we are trying to bring people and the labour office closer together. We are making efforts to provide financial cover to investments into transport infrastructure, spending on strengthening transport service, with the goal, of course, of maintaining job opportunities and increasing workforce mobility.

This plan is strong and responsible. When I say that the new measures the government has accepted will not weigh down the state treasury too much, the finance minister will not agree with me. The new measures come in at CZK 40 billion, roughly 1.1 % of gross domestic product. Together with the steps that have already been accepted in the first phase of the crisis, which were CZK 32.2 billion, or 0.85 %, the impact of these measures come to something over CZK 70 billion, or nearly 2 % of GDP.

The plan is fair and cross-sectional and avoids partial interests. It does not favour individual sectors. Instead of giving more assistance to these or those, all the complicated measures are more or less flat. The plan is open and does not rely on protectionism. We did not want the measures to bear the mark of protectionism and economic nationalism in the sense of "buy American," which we hear not only in America. On the contrary, as an open economy we want to fight against the growth of these tendencies both within the European Union and outside it. We do not want, of course, to stimulate consumption, which is mostly covered by imports. That would lead rather to a worsening of net imports than to GDP growth. Anyone who proposes otherwise is making a relatively serious national economic mistake in our economy.

The next principle, given by this plan, provides guarantees to those companies who need them. Despite the Czech banking sector not being sharply affected in the first phase of the global financial crisis, there exist relatively serious problems from the point of view of financing for companies from the non-finance sector, and in the first place, for small and medium enterprises. The national anti-crisis plan is especially focusing on this area and these companies through connecting a fundamentally larger volume of resources. The final, twelfth principle, is that we free the hands and resources of companies. The corporate sector has serious problems with cash flow as given by the high amount of insecurity. Employers for this reason have the ability to request their tax advisor or the Czech Social Security Administration to decrease their tax deposits, to spread out the payment calendar, that sanctions not be enforced, and so on.

I want to point to a very popular myth rather to rule it out, that we slept, that we didn't do something in time. On 2 December I set out the 4 basic steps. Renewing confidence in the financial sector, avoiding and eliminating the risks of the financial crisis, finding impulses for economic growth and finding tools for the stabilisation and limbering up of the economic environment. We have that first phase, which are those first two measures, behind us now. From October 2008 to January 2009, the government accepted an entire range of measures intended to renew confidence in the financial sector, in the prevention and elimination of risks of the global crisis. These measures included stimulus worth 2.6 % of GDP, nearly CZK 100 billion with an impact on the public budget, as we mentioned, of roughly 0.8 %, which is CZK 32.5 billion. That second phase, that is precisely the government's national anti-crisis program, which was proposed in cooperation with NERV, which should mitigate the impacts of the impending recession, and together with these measures in the first phase, a comprehensive proposal was created, which was divided according to NERV's proposal into 7 thematic spheres.

The third phase, which should be completed by October of this year and should introduce tools which should stabilize and limber up the economic environment. This relates rather to structural policy and structural reforms, and in this sense, we intend to tie into the work that stems from the government's new proclamation. I will very quickly introduce these steps and leave it to my colleagues to explain them in detail. For this in red with a paragraph, you will certainly understand that these are measures requiring cooperation with the parliament. They will have to go through the legislative process. I hope it will be shortened. In the area of taxes and deductions, these are about decreases in the social insurance rates and cuts in companies' tax burdens. They are measures that have essentially already taken place, and support the cash balances of sole proprietors and companies. In the second area, we want to support doing business and private investment through speeding up amortization, which means of course that it is necessary to change the law on income tax, and expand the use of VAT writeoffs for automobiles, which is now being discussed in the parliament. Deferrals of the requirement to pay a deposit on taxes, which of course is a measure that, for sole proprietors and companies with up to 5 employees, factually enables them not to have to pay deposits on taxes this year. And the final measure from this package is to speed up value added tax refunds to 15 days for those who file returns electronically.

In the third area, relating to supporting employment, there is this proposal for a cut to social insurance, where an employer can use for their employees with pay of up to 1.15 times gross salary; the amount of the cuts will decrease with the amount of the salary. It is depressing that for low-income groups, the importance of this important stimulus is in their pocketbooks. Increased regional transportation services are included in this package, with the goal of increasing worker mobility in the hardest-hit regions, and of course, measures that help all companies who do not have complete demand all week long, all month long, to use funds, structural funds for requalification, where wages up would be refunded up to 80 %, including social and health insurance.

The next package of measures relates to environmental and infrastructure spending. They relate to cuts in fees on railways, cuts to buildings energy requirements and an overall massive investment programme into transportation infrastructure, which factually doubles the amount from 2004-2005. Strengthening other spending areas, for example, the Programme for the Renewal of the Countryside and so on.

The fifth set is support for the restructuring and insolvency process, which is roughly 14 measures that include both legislative and executive steps related to the insolvency process. This is one of the additional laws that must be investigated and amended.

The sixth set is support for exports, renewal and strengthening of lines of credit. We will guarantee and support loans. As we have already tried to explain, this is the programme of the Českomoravská Záruční a Rozvojová Banka [the Czech-Moravian Guarantee and Development Bank] worth roughly CZK 40 billion. To increase guarantees to 80 % of the maximum possibility of drawing down CZK 90 million for one company. Support to exports and measures that have already to a large part been realised, which enable the drawing down of loans and export loans worth up to CZK 35 billion. New products for small and medium enterprises have been created, and the services of the Export Guarantee and Insurance Company have been made less expensive. We are preparing an increase in insurance coverage.

The seventh set, which we consider to be very important, is support to science, research and innovation, where, including resources from the European Union for this year, the absolutely unprecedented amount of CZK 32.4 billion has been approved for this year. Very briefly, that is all from me for the introduction. For the majority of these executive measures, but for the legislative ones, it's not us who needs them, but Czech employees, Czech businessmen, Czech companies definitely deserve a very rapid discussion, because they are waiting for these measures. These measures will come into effect immediately and in this sense they could eliminate the problems we expect. At the very end, we of course are not able - and nobody is able - to estimate developments and the depth of the recession either in the Czech Republic or in the European Union; we will cooperate with NERV permanently. For the entire duration, we will evaluate individual measures and their impacts with impact studies on the basis of the data we will have available. Together with NERV, we will cooperate on preparations for the G20 meeting in London, where the first step is the G5 meeting this Sunday in Berlin, which I will take part in. We will prepare a programme for this renewal plan's factual fulfillment, and the economic renewal plan at the March summit of the European Union, which NERV will also take part in. That is all from me for the introduction. Thank you for your attention.


Jana Bartošová, spokeswoman for the government of the Czech Republic: I'd like to thank the prime minister, and now I will ask Mr. Petr Nečas, the deputy prime minister and minister of labour and social affairs.

Petr Nečas, deputy prime minister and minister of labour and social affairs: Ladies and gentlemen, I would only add to the prime minister's appearance by saying that our primary goal is to slow down primarily unemployment growth as much as possible within the framework of public finance. As a pro-export oriented economy, we cannot solve this global economic crisis. Our task is to try to slow down the impacts of this crisis, and we have decided to concentrate mainly on the area of employment. That means to concentrate public resources not on the payment of social benefits, but to concentrate on keeping the maximum number of people on the labour market as is possible, to support employers and to support employees as well in this effort. It is always better when a person remains, even under certain temporary conditions, schooling here, with a specific company than when he finds himself in the social protection net and then, even at a time of growing connectors it is hard to reintegrate into the labour market. That means we will concentrate public resources on this area. I would also like to say that cuts in social insurance payments are primarily on the basis of data that we have from analysis of the development of unemployment in the recent months, and is heading mainly to people who have rather lower qualifications, have lower ability to hold up in the current firings. They are and have in the event of a newly-started economy worse possibilities to return to the labour market. I would like to only read you a list of the five hardest-hit categories of employees who are currently losing their jobs. Construction workers, assistants and unqualified labourers in industry, garbage collectors, street sweepers and workers in related fields, motor vehicle drivers, sales clerks in stores, operational workers in food services and workers in related fields, assembly workers. Those are categories which are by far being laid off the most at this time, and it is precisely this cut to social insurance payments which will mean that an important part of them will have lower payments, because a vast majority of these categories have an average pay of around CZK 14,000 to 15,000, which means that an important part of them have even lower pay. It is precisely this cut to social insurance payments together with the elements we have introduced there, meaning from the European Social Fund, the financing of educational activities through the "Educate Yourself" programme that will strongly help the possibility that these people can stay in their jobs. Riding out the crisis with these people in their jobs at a time will also mean that the when the economy takes off, their records won't have to be pulled from the labour office with great effort, but will be at the company.

So protecting employment is in first place for us.

Jana Bartošová, spokeswoman for the Czech government: Thank you.

Mirek Topolánek, Prime Minister of the Czech Republic: I asked for another brief word. I didn't tell you the key numbers you were waiting for. If we discuss the impulse overall, the impact isn't 4.7 % on the budget, but it means factually nearly CZK 180 billion. You should know that number.

Jana Bartošová, spokeswoman for the Czech government: Thank you, Mr. Prime Minister. Now I would like to ask Martin Bursík, the deputy prime minister and environment minister.

Martin Bursík, deputy prime minister and environment minister: I would stop these big numbers on the smaller number of CZK 25 billion, which we can bring to this programme and a certain guarantee of administration of this volume of financial resources, which we should gain from the sale of surplus emissions certificates from the time of Kyoto trading. The Czech Republic has cut its emissions sharply more after 1990 than was in the Kyoto commitments. There are countries, there are economies, that are interested in buying these permits in the form of a bilateral contract or in an international auction, and we are very close to closing at least two very important contracts. We expect that this year it would bring in roughly CZK 10 billion to the economy, but what's essential is that the requirement without closing this contracts is a guarantee that these resources will be used for further cuts in greenhouse gas emissions, the so-called greening factor. We have managed to model this factor in this programme, which is prepared and will be launched in April in such a way that we have achieved prices – which unfortunately I cannot reveal to you, but the prices are in line with all the prices we have found out about that have been closed so far – it is greatly larger, and the financial resources will mainly go into energy savings in households, public buildings and also for heating and heat production from renewable energy sources. It's important to say that there we expect a high multiplier effect, because when we look at the largest company active on the Czech market in the area of heating and insulation, that company's turnover is CZK 1.6 billion, and with this programme, we are bringing roughly CZK 10 billion and in the next two years and beyond an additional CZK 15 billion. It's important to emphasise that this will relate mainly to sole proprietors, small companies and regional companies. These are not contracts of the heating type, they are not contracts for those companies from the big 5 construction firms, which do large infrastructure construction. So it's important that it will be addressed directly to support for construction in the regions.

There are also an number of other measures, which maybe hidden somewhere but are important. We thought about support to the recycling industry, which has a large problem because of sales, partly because China doesn't have sales, and partly because oil prices have fallen, so it pays to produce PET directly and not from recycling. There are additional reasons there, and we are looking for impulses. We will try. We have an agreement with Mr. Finance Minister. They have been difficult meetings, but we have made an effort to have certain environmental services and products be classified into the lower VAT rate. We are aware that this requires a unanimous vote in March at the Council of Finance Ministers, but also in our council and at the European Council. I don't want to go into additional detail, but as part of public contracts we have a programme there that supports the purchase of products and materials from recycled materials such as anti-noise barriers from mixed plastics, which are economically more advantageous and so on. Just on that program, we have calculated that we will create and maintain 12,000 jobs this year, which, I think, is a very interesting number in the area of these jobs in environmental technology in energy savings. Thank you.

Jana Bartošová, spokeswoman for the Czech government: Thank you, deputy prime minister. Now I would like to ask the finance minister, Mr. Miroslav Kalousek.

Miroslav Kalousek, Finance Minister: Ladies and gentlemen, good day. In all the discussions with NERV, I've had the unpopular role of the advocate who has to ask the question of how much it will cost, and where we'll get it from. I'd like to say how much I immensely appreciate this responsible discussion, which has in no way tried to push forward either the partial lobbyist interests of this or that segment of the Czech economy, and all the ministers gave up the temptation to push for this or that ministerial priority. We really looked for across-the-board tools and I am convinced that, within in the framework of the given fiscal possibilities, this has occurred. For this, I would really like to thank everyone, because from this standpoint it has been an extraordinarily effective, non-populist and, considering the future costs, an incredibly responsible discussion.

As regards the proposals that must be presented by the finance minister, when the prime minister said that only some of the proposals are legislative, I would like to point out that we will vote on the possibly much more important legislative proposals in the parliament in about an hour. They are related to the proposal by the opposition and by Mr. MP Tlustý on the proposed consumption tax law and on the proposed VAT law. To this I would like to add that they are about three times more threatening for impacts on public budgets than the economic crisis. If this populist nonsense were to really be passed and become legal reality, everything we are presenting here would be unrealisable. I would pack my suitcase and head to the International Monetary Fund to request international assistance, because nothing other than a crisis of state finance would await us thanks to these smart proposals.

I would like to point out that the economic crisis is one threat, but an even greater threat is the voting coalition of Filip, Paroubek and Tlustý. So cross your fingers for us, so that we will be able to face this even greater threat in an hour.

Of the legislative proposals the ministry is presenting, there is only the proposed law on income tax where we are trying to awaken demand and bring private sources of investment into the economy and to speed up depreciations. It will be strongly time-limited, which is its beauty. If we say to those who are able to invest that if you want to have advantageous depreciations, invest now; if you wait, you won't have this advantage. It's tied to the relief for small businessmen, and I emphasise that it is for sole proprietors as well as legal entities; for entrepeneurs and for legal entities with up to 5 employees inclusive, they will be sufficiently informed through the financial authorities and advertisements that they don't even have to apply. They don't have to pay a deposit on income tax in 2009, which means they will have cash available to make use of the investment incentives of accelerated depreciation. Which will understandably help to optimise their tax responsibility in 2010. From this standpoint, we have tried to tie these proposals together. This is infinitely more effective than the refund from 2007, because it supports those who are competitive, those who can get moving. For retroactive state support for those who are uncompetitive, we unfortunately have neither time nor money. We must support only those who are able to survive.

Changes to the VAT law also belong to this; in several expert papers I have read that it is non-systemic. I would like to oppose this. It is, on the contrary, systemic, because it is an exception. Every payer of VAT has a right to a VAT refund from anything they buy, with the exception of cars and works of art. These two exceptions discriminate against cars and works of art. I am convinced that a far better effect than the wire mesh and the calculation of the ratio of cargo space and passenger space is to make systemic measures, because removing exceptions is always systemic. And enabling VAT on automobiles as any other investment or purchase. I am convinced that it will have a better impact for the automobile industry and the industrial sectors that are related to it than any kind of car junking premium.

So much for the tasks of the finance minister. I would once again very much like to thank all my colleagues from NERV and all the economic ministers for the cooperation that has accompanied this. In 2 hours, the opposition will say that everything is bad and everything is too late. We will argue that it is correct and that we are convinced of it. Hopefully the European Commission won't have any suspicions of any socialist or conservative bias in the prescriptions. From this perspective, the European Commission is an extraordinarily impartial body. Today in evaluating the Czech convergence programme and our proposals for a growth and renewal plan, it stated, and now I will only quote: As part of its evaluation of the Czech convergence programme, the European Commission has praised the government's measures to support an economy afflicted by the global crisis. According to a statement by the European Commission, our measures, which we present to you today, are well-timed and targeted at the sectors which will be most afflicted by the economic slowdown. That was the answer not by us, but by an independent arbiter on the criticisms that we were asleep or that we're headed in the wrong direction. Thank you.

Jana Bartošová, spokeswoman for the Czech government: Thank you to the finance minister. Now I would like to ask the minister of industry and trade, Mr. Martin Říman.

Martin Říman, minister of industry and trade: Good day. Please allow me two notes on this material from the perspective of the industry ministry. First, as regards the situation and the measures in the sense of the small and medium enterprises, here it can be said that the combination of four measures, two of which the finance minister spoke of - accelerated depreciation and improving their cash flow because they won't have to pay deposits this year - and an entire fan of support from the side of improving access to loans, whether export, investment or operational, which will be mediated by the Czech Export Bank and the Czech-Moravian Guarantee and Development Bank, but also from the middle of this year as regards export financing by all commercial banks. We are currently preparing this proposed law. The combination of these measures means, and I don't want to say it is luxurious, but it is an essential improvement for small and medium enterprises as regards cash flow in these difficult times, or as regards access to loans and guarantees at a time iwhen one of the biggest problems for companies is access to credit at commercial banks. In other words, this fan of measures with regard to lending and loan guarantees is wide, and nearly every small and medium enterprise should find something in it, not just those who export, but those subcontractors to larger export units. From that perspective, I think that small and medium enterprises can be satisfied, and we of course will start an information campaign so that they can reach for this, so that they are aware and know that these tools exist.

The second note relates to structural funds. We did this last year, with regards to subsidies from the Enterprise and Innovation structural fund, we have accelerated in a major way the drawing down from all sub-programmes. This week, CZK 1.75 billion was released to the Czech-Moravian Guarantee and Development Bank. It is another tool to assist small and medium enterprises in investment and enterprise loans, whether they are about pure loans or loan guarantees, and we sped up by a year the standard programmes such as development, marketing and so on, which is pure money that goes directly into companies' accounting. At the same time, because today co-financing of that 15 or more percent that must come from one's own pocket is a problem, through the Czech-Moravian Guarantee and Development Bank we are able to guarantee, provided the project is one of quality - but this relates to all -to give a guarantee on loans from commercial banks for securing additional money. The measures are such that the infrastructure, which is designated by the state for support to exports and supplies for export companies have been set in such a way that they not become the bottleneck for companies. That means that if companies have a quality project, have customers, have a place to take the goods, have where to produce them, then they should simply be able to reach for the financing, so that they have money.

Jana Bartošová, spokeswoman for the Czech government: Thank you.

Mirek Topolánek, Prime Minister of the Czech Republic: I've just read even such criticism that this program, where we are thinking about those who are unemployed, who are outside their place of employment, and I'm saying this completely responsibly, that our laws have thought of them in good times and that in no way will we reach for any amount of support for unemployment, for any social benefits, which are set today and which are valid in good times, so that not even in this situation, which awaits us, will we touch these in any way. It must be said, because it's as if in these measures they were missing. They're not. The T is there.

Miroslav Kalousek, Finance Minister: One small qualification, Mr. Prime Minister. If the opposition's proposals on VAT and consumption tax are passed. Then the international institutions will command us.

Mirek Topolánek, Prime Minister of the Czech Republic: That, unfortunately, is true.

Jana Bartošová, spokeswoman for the Czech government: I'd like to thank all the members of the government. Now for your questions. Czech Television.

Czech Television: I have a question relating to the changes in taxes, for example. In the materials, you had further decreases in corporate tax? Will you propose accelerated decreases, or what do you say about the Social Democrats' on the contrary proposing an increase and taxation of the highest income groups?

Mirek Topolánek, Prime Minister of the Czech Republic: We have divided the measures into the first, second and third phases. The first phase includes steps that have already been realised. The second phase includes steps that are now proposed, and the third phase is a systemic structural solution by October of this year. The measures you speak of fall into those already realised, which means a cut in corporate tax or a cut in taxes for legal entities and also a cut in social insurance payments by 1.5 %, which took place as of 1 January of this year.

Miroslav Kalousek, Finance Minister: If I can add to this. Accelerated depreciation means a decrease in the income tax. But it isn't a cut in the rate, but a cut by accelerated depreciation, or an investment incentive which in the given case is much more effective and has a much greater multiplier effect. Yes. We are proposing a cut in the income tax, but through cuts in the assessment base through accelerated depreciation, not through the rate. On the contrary, in their programme, the Social Democrats are proposing to increase income tax, which in a time of crisis is the kind of therapy where you would slit the wrists of a bleeding person.

Czech Television: Thank you. One favour. Could I get your reaction to the praise from Brussels, and not just the quotation?

Miroslav Kalousek, Finance Minister: Our quotation was that the Commission has appreciated our plan as being realistic. That is satisfying because the Commission knows how to read what is true.

Petr Nečas, deputy prime minister and minister of labour and social affairs: I would like to add. Our reaction is that we expected nothing else.

Jana Bartošová, spokeswoman for the Czech government: Thank you. Please.

Týden: I wanted to ask how much will the information campaign cost for relief on the tax assessment base as well as for those programs for small and medium enterprises? I would further like to ask in which way you will finance this impulse of the 70 billion crowns, which the measures contain, and further I would like to ask Mr. Minister Nečas if he could specify in which way the cuts in social insurance payments will be made?

Mirek Topolánek, Prime Minister of the Czech Republic: The informational campaign. All of the ministries have as part of their budgets, their chapters, the money necessary so that the campaign, which is normally done for every measure, which the government approves, to make an estimate. It will be normal within working order, and no extraordinary spending.

Martin Říman, Minister of Industry and Trade: It depends on whether you're going to write 'free' or not. If you're not going to write about that, then it will have to be a bigger information campaign.

Miroslav Kalousek, Finance Minister: The most pressing thing now is to inform, because the deposits on income tax are paid by 15 March. That's the first payment. The most pressing thing by that deadline is to inform both sole proprietors as well as legal entities up to 5 employees inclusive that they do not have to file any request for a decrease, that they simply do not have to pay. That is my executive privilege, and I have already carried this out. Nobody will want this from them, but they must know. The financial authorities at this moment have orders that they should inform with the widest possible scope. Aside from that, I will also issue several advertisements, including one where your publisher has been relatively amenable, so that advertisement won't cost more than CZK 200,000.

Mirek Topolánek, Prime Minister of the Czech Republic: I would like to add that the public service media should have a legal responsibility to do this, but we'll see how the public service media behaves.

Petr Nečas, deputy prime minister and minister of labour and social affairs: As regards cuts to social insurance payments, this will be calculated by the employer. They will calculate the discount per employee, will make a sum for their employees and will deduct that much less from what they send to the district social security administration; they will simply keep what the discount will be. We are doing it in this way directly with the employer so that we do not burden bureaucrats, neither at the employer or at the Czech Social Security Administration, because that would be the back of beyond to deduct everything and then return it back to them. Frankly, they will keep the discount. The discount will be degressive. It will be from the minimum wage, which will be roughly CZK 700 and will decline to 1.15 times the average wage, until it gets to zero. Wages above this amount will have a zero discount. When you look at analyses of the professions with redundancies, you find that this affects the vast majority of those made redundant, and even, when you look at the individual tenths of a pay packet, this discount will affect 80 % of employees.

Jana Bartošová, spokeswoman for the Czech government: Thank you. ČTK.

ČTK: I wanted to ask if in these costs for the measures include the dispensation for those income tax deposits. Are there any? Or is it a big zero?

Miroslav Kalousek, Finance Minister: When I take the statistics from 2007, sole proprietors and legal entities paid CZK 22 billion in deposits in 2007. But we are not in 2007. At that time the economy had smoke coming out of its ears and everyone had profits. Today those subjects are fighting for their lives and their tax responsibility will be infinitely lower and will be more likely to be approaching zero than CZK 22 billion. You don't have the impacts in cash methodology, you have them in the ESSA 95 methodology. In the current methodology, and in that case I can't count anything other than increased costs for servicing debt, because with these measures we are worsening the state's cash flow and increasing cash flow for small businessmen. We estimated the state's cash flow at CZK 1 billion in costs for servicing debt, which will be paid off in 2010. This is not a forgiveness of taxes. It is a postponement of payments.

Jana Bartošová, spokeswoman for the Czech government: Thank you. Reuters.

Reuters: Good day. I wanted to make one thing clear. This plan counts on a decline in the economy of one and more percentage points, and on the other hand you say it should bring an impulse with a volume of 4.7 %.

Mirek Topolánek, Prime Minister of the Czech Republic: 4.7 % in value in crowns, not in GDP percentage.

Miroslav Kalousek, Finance Minister: If I may explain it to you. On the amount the GDP will grow this year, I can venture to say that economic prognosticators are worse off than meteorologists. We firmly hope that it will oscillate around zero. Nonetheless, we are required to also calculate a scenario of -2 %. As the probable worst-case scenario. If other skeletons fall out of the closet on the American or Asian markets, it could be worse. For this reason, NERV considers this material to be measures for the scenario of 0-2%. We are required to calculate a possible worse situation than has been imported to us because this material is open and NERV will meet continually so that it constantly evaluates the efficacy of the measures already adopted. In the event that improvements in effectivity have been proposed, further measures could be necessary due to situations unforeseeable today. Situations of turbulence simply happen, and for this reason NERV remains a constantly acute body which will constantly meet and monitor the situation and propose the appropriate executive measures. We have numbered two of these. What the impact will be on the public budget? The impact on the public budget will be roughly 2 % of GDP. With 1 % GDP, count on around CZK 40 billion. Impact of around 2 %, that is an impact on the public budget. That simply comes at the expense of the balance and you can simply write at the expense of the deficit. But we chose measures that have large multiplier effects. Either they motivate the banks to provide loans, or the motivate private investors to add their own money to state contributions or state support. You have only three channels. Growth in the economy can be there, provided there is money. There are three channels how to release money. The private investor, the bank and the state budget. The private investor is careful. The bank is scared. The state budget has no liquidity and must borrow. In these limited possibilities we have within the framework of indebtedness, we are trying to choose such tools that initiate the other two resources. When you calculate the 2 % of the state budget with the impact of the money that the private investor and the bank gives, then we are approaching 5 % of resources that will be put into the economy.

Mirek Topolánek, Prime Minister of the Czech Republic: I want to say that a number of measures have a parametrical character, and that CZK 1 billion put into the Czech Export Bank generates CZK 35 billion in loans, for example. We are able to additionally specify those parameters during this year, and the basic measures, the entire fan, is something we praise and are able to alter the parameters according to how the situation develops. Today it is a fiscal stimulus package worth CZK 180 billion, as we have said.

Jana Bartošová, spokeswoman for the Czech government: Thank you. Please, Haló noviny.

Haló noviny. The only systematic opposition daily in the Czech Republic. I would like to ask rather about the real economy according to real experts. Mr. Prime Minister, you called them milkers of cows whose advice you do not need in NERV, right? A while ago. According to the real experts, the real economy would be helped if the construction of the two blocks of the Temelín nuclear power plant were begun. Unfortunately, now it looks that we are in a bureaucratic environment, which will last possibly several years before this preparation is successful, so are you thinking about how you will overcome the political barriers of the Greens? Are you thinking that you should accelerate this construction of the Temelín power plant, which would really help the real economy? Thank you.

Mirek Topolánek, Prime Minister of the Czech Republic: I mostly try to answer smart questions. This one is especially successful. You must know that the preparation of construction of a nuclear power plant sometimes lasts 10 or 12 years. We are in a situation where we have not lost time. We are the first political representation even with the Greens in the government, which has begun the EIA process on two blocks at Temelín, which could take 2 or more years. Ask this question, please, in 2 or more years to the political representation which will decide on the possible construction.

Jana Bartošová, spokeswoman for the Czech government: Thank you. Last question, please.

Blesk: I would be interested to know how many jobs your measures will save this year? Do you have an estimate?

Mirek Topolánek, Prime Minister of the Czech Republic: Try to tell me how many of those jobs the economy will lose, so that we can compare it.

Petr Nečas, deputy prime minister and minister of labour and social affairs: We assume that the cuts in social insurance payments could save roughly 50,000 to 70,000 jobs when tied to the "Educate Yourself" campaign we are talking about, and it could be more.

Martin Bursík, deputy prime minister and environment minister: I would like to add that we calculated those 12,000 jobs related to investments into energy savings and heating through renewable sources.

Blesk: Do you think the recession will have any positive influence on the economy? For the Czech economy.

Mirek Topolánek, Prime Minister of the Czech Republic: Certainly. It has completely unambiguously shown us that the monocultural dependence on one sector and type of industry at the time of conjuncture is very positive, but in a time of crisis it shows the economy's vulnerability. That is the first effect. Greater diversification, which cannot be decreed, but can be somehow stimulated, and the second is that in times such as crises, an entire range of ineffective products are removed, and sometimes ineffective investment is not realised. Certain segments of the market are cleaned out, which could sound to some as drastic, but as 1997 and 1998 showed, the construction market cleaned itself out in this way. It sounds very brutal, but it could have these positive effects. Nevertheless, the measures we are realizing have a sort of levelling effect. So on one hand we are helping to keep jobs and on the other hand the effects of a cleanout of a segment of the market will be levelled out with this. We are actually carrying out non-market measures, but nonetheless they are necessary at the given time.

Petr Nečas, deputy prime minister and minister of labour and social affairs: I would add a sentence that many will not like but is nevertheless true. Because of this recession, we will all begin to once again appreciate work and employment. That isn't bad after those previous years.

Martin Říman, minister of industry and trade: I would add that I would not be as tragic as my colleagues before me, because among the measures that are in the proposals, some of them are short-term or immediate, and cease to be valid at the moment when the crisis fades away, but on the other hand, there will be long-term measures which can be said will be forever, and there are positive measures, which would not have been possible without the crisis; they would not have occurred, because we would not have found the courage or the strength to do such things as to further cut the costs of labour. As an experiment, accelerated depreciation may prove to be not only a short-term solution as the accelerated removal of administrative burdens, which is also in this material and we did not talk about. The crisis enables the state to take measures that it would not have taken in years of plenty.

Jana Bartošová, spokeswoman for the Czech government: Members of the government, members of NERV, thank you for your attention. Goodbye.

Mirek Topolánek, Prime Minister of the Czech Republic: We thank you, and would like to kindly ask you to help us. Thank you.

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