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Europe

New coalition takes the reins in the Czech Republic

A new center-right government was ushered in on Tuesday in the Czech Republic. The three-party coalition, led by Prime Minister Petr Necas, has pledged to cut the deficit and fight corruption.

Petr Necas, Chairman and leader of Czech Civic Democratic Party gestures at a press conference

Necas' government brings together three different parties

Czech President Vaclav Klaus officially appointed a new government for his country on Tuesday.

Headed up by Prime Minister Petr Necas, the government is a coalition made up of the Civic Democratic Party, the country's main conservative party, the conservative TOP 09 and the centrist Public Affairs party.

A coalition agreement was signed on Monday that set out plans to fight corruption, reduce the deficit and overhaul the healthcare and pension system in the Czech Republic.

The appointment ends more than a year of political limbo, the longest the country has gone without a proper cabinet. Necas and the new 14-member cabinet took over immediately from Jan Fischer, who had led the country as a caretaker prime minister since the previous center-right government collapsed in March 2009.

The three parties won 118 seats in the 200-seat lower house in late May, giving them the largest majority since the breakup of Czechoslovakia in 1992. Parliament must rubberstamp the new government within the next 30 days.

A budget for tough times

A one-euro coin and several euro bills

For Czech politicians, the euro is looking less attractive

The first task of the new government will be to draw up a 2011 draft budget. The new leaders hope to reduce the planned 2010 deficit of 5.3 percent of gross domestic product to below the EU-mandated ceiling of 3 percent. Government debt is on the rise, but the coalition agreement promises not to raise taxes but instead enact sweeping cuts.

The parties have agreed to cut wages in the government sector, as well as make cuts to housing construction subsidies, unemployment benefits and maternity leave. The government did say it will raise the value-added tax and taxes on lotteries, betting and gambling.

Healthcare costs are also set to rise and the government would like to introduce a university tuition fee.

The coalition agreement did not establish a target date for the adoption of the euro currency, saying such a date would only be set "if the common European currency develops as a meaningful and sustainable project."

Author: Holly Fox (AFP/AP/Reuters)
Editor: Chuck Penfold

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