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July 12, 2018 11:00 am | FILED UNDER: politics

Babis’s Programme Includes Populist Economic Policy

By ČTK andrej babis

Prague, July 12 (CTK) – The government of Prime Minister Andrej Babis (ANO) came with a rather populist economic policy which does not include the possibility of a drop in the Czech economic growth during its time in office, analysts approached by CTK said.

 

The minority cabinet of ANO and the Social Democrats (CSSD) won confidence of the Chamber of Deputies at night.

 

“The economic part of the new government’s programme can be characterised as a combination of reasonable steps (a strategic investment plan), populism (a lower value added tax on beer) and futility (a number of pension reform paragraphs lacking content),” Deloitte company analyst David Marek told CTK.

 

The policy statement Babis’s government presented is likely the most populist complex document since the fall of the Communist regime in 1989, Radim Dohnal of the Capitalinked.com portal said.

 

The policy statement lacks self-consciousness, he added. It does not mention economic crisis in any way, nor does it include a preparation for it.

 

The cabinet’s economic policy is weak, UniCredit Bank analyst Pavel Sobisek said.

 

The government does not envisage a general economic slowdown which will come during its time in office, Cyrrus company analyst Lukas Kovanda said. There will be nothing to do about it as the decline will result from the European or the global economy.

 

The policy statement makes promises but does not say how it will pay for them, Kovanda said.

 

In general, the policy statement is favourable for employees, while its measures harm sole traders and entrepreneurs, especially those with higher incomes, Kovanda said.

 

The most rational items of the government policy statement include the separation of the pension account from the state budget, and aid for innovations of small and medium-sized enterprises, Chytry Honza analyst Karel Kotoun said.

 

There is no specific plan for attracting foreign investors, apart from a rise in drawing of the European Union funds, and the only innovation focuses on the portal of the state administration and Finance Ministry, he added.

 

The policy statement and the state budget’s Kc50bn deficit for 2018 is set for a highly expansive government policy.

 

Introducing free public transport fares for large groups of population is a populist step, too, Sobisek said.

 

The problem of such a measure is not its enormous costs but how hard it would be to cancel it in case it does not work out, he added.

 

The word ‘reform’ will be used a lot, however misleadingly and with the goal to make the impression of a great drive, while merely cosmetic changes will really be made, for example in the pension system, Sobisek said.

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