New Czech government says yes to EU fiscal pact

(PRAGUE) - The Czech Republic's new government said Monday it had approved accession to the European Union's fiscal pact, which is aimed at curbing spending in the 28-member bloc.

"The government decided today to kick off the ratification process and agreed...to join the fiscal pact," leftist Prime Minister Bohuslav Sobotka told reporters, highlighting a turnaround from the previous administration's largely eurosceptic stance.

Under that centre-right government, the Czech Republic was the only other EU member besides Britain to refuse to sign the pact that bloc leaders adopted in 2012 to help end the eurozone debt crisis.

Toppled last year by a spy and bribery scandal, then prime minister Petr Necas had attacked the pact for failing to ensure participation at eurozone meetings for EU countries like the Czech Republic that were still using their own currency.

Sobotka said Monday that the decision to endorse the pact was "an important step towards future adoption of the euro," which the Czech Republic is required to do under its 2004 EU entry terms.

But Prague has not fixed a deadline to join the struggling European single currency, with central bankers and politicians alike suggesting 2019 as the earliest date possible.

Sobotka, whose three-party centre-left coalition commands a 111-seat majority in the 200-member parliament, must cobble together a two-thirds constitutional majority of 120 votes in order to formally adopt the fiscal pact.

He has said he expects parliament to assess the proposal "during the summer".

An export-oriented country of 10.5 million people, the Czech Republic is heavily dependent on car production and exports to the eurozone.

Its economy shrank in both 2012 and 2013 as the currency bloc itself struggled to emerge from recession.

But a healthy 1.6-percent expansion in the fourth quarter of last year has fuelled optimism that a Czech central bank forecast of 2.2-percent growth this year is realistic, after 1.1-percent contraction in 2013.