(Bloomberg) — A new government took power in the Czech Republic, pledging to trim spending, raise vaccination rates and address soaring energy prices as it ends seven years of political dominance by billionaire former Prime Minister Andrej Babis.
The cabinet of Premier Petr Fiala, the leader of the five-party coalition’s strongest member, was appointed after winning a dispute with President Milos Zeman, who had tried to use his largely ceremonial role to change the government lineup.
The arrival of the new coalition on Friday puts an end to a period in which the country of 10.7 million clashed with fellow European Union members under Babis. The tycoon faces accusations of criminal fraud at home and conflict-of-interest from Brussels because his companies receive funds from the bloc.
But the power change doesn’t represent a complete about-face in the Czechs’ relationship with more liberal-led EU members. The conservative-to-leftist mix of parties in the coalition differ over stances ranging from ties with bloc’s rebels Poland and Hungary and social issues including same-sex marriage to how and when to meet the EU’s environmental goals.
Czech vaccination rates, meanwhile, lag western peers, and the country has ranked among the world’s most-deadly places for Covid-19 during different waves of the pandemic.
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“We are taking power in a very complicated environment,” Fiala said this week. “We are fighting Covid, we have soaring inflation, energy prices that for many people may mean poverty, and there is a difficult international situation. All these issues need to be addressed by the government.”
Fiala, a former dean of the country’ second largest university, campaigned mainly on the promise to oust Babis and reverse his fiscal policies. The new government is backed by 108 of the 200 seats in the lower chamber.
Fiala said his predecessor had driven up public debt and fueled inflation with unprecedented spending to raise wages of teachers, doctors and other public workers, as well as increasing pensions and providing cash relief to business hit by the pandemic-induced lockdowns.
The new cabinet has pledged to slash 2022 state budget deficit to around 300 billion koruna ($13.5 billion), from the previous administration’s plan of 377 billion koruna. Fiala has not provided specifics but has said he wants to start by lowering ministries’ “operating expenses.”
“It’s not possible to have a budget with a such high deficit,” he said. “It has to be clearly showed that the cabinet reacts in some way to rising inflation, that it won’t support the budget that helps inflation to spiral.”
The cabinet will decide Monday whether it will ask parliament to prolong the state of emergency put in place during the pandemic. Fiala already pledged to avoid new lockdowns on businesses and to ease social-distancing restrictions on non-vaccinated people.
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