The Czech government will have to hike borrowing this year to cover a sharply higher budget gap widened by economic decline, finance minister Eduard Janota said on Sunday.
Janota said in a television debate that gross borrowing could reach as much as 280 billion crowns ($14.7 billion) this year, more than double the original borrowing plan and also above previous forecasts.
The Czech Republic has not suffered a financial system meltdown thanks to a stable banking sector, relatively low foreign debt and low current account gap. But its export-driven economy has suffered badly from a collapse of demand in Germany and other key markets.
Janota said the borrowing was necessary to finance the 2009 central budget gap, which the government sees at about 150 billion crowns, four times the planned 38.1 billion, as the economy shrinks by more than 2 percent. The government has already been borrowing heavily this year both on the domestic market and through a 1.5 billion euro eurobond, in part to roll over about 100 billion crowns in maturing debt.
"Of that 280 billion (crowns), we have already issued about 180 billion, so about 100 is left for the remaining part of the year," Janota said. The Finance Ministry said on May 4 it would need to borrow about 90 billion crowns more in the rest of the year, and has since already sold 19 billion worth of bonds to investors in three domestic auctions.
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