Three Czech parties sealed an agreement on Monday to form a centre-right government that will aim to cut the country's budget deficit and overhaul the healthcare and pension systems to halt a rise in debt, according to Reuters. Prime Minister Petr Necas, leader of the right-of-centre Civic Democrats, signed a coalition pact with the heads of the conservative TOP09 party and the centrist Public Affairs party, paving the way for the cabinet to be appointed on Tuesday. The Czech Republic has a low debt load by European standards but it has been rising fast, posing a longer-term financing threat, and the new cabinet's first task will be to prepare an austere 2011 budget draft. "We are all aware of the responsibility which we bear for meeting the key tasks we have set in the coalition agreement: to stop indebting this country, strengthen the rule of law and narrow the space for corruption," Necas told a news conference after signing the agreement. The centre-right parties, which won a May 28-29 election on promises of thrifty policy and greater government transparency after a series of sleaze scandals, will have 118 seats in the 200-seat lower house, the largest majority any government has had since the split of Czechoslovakia in 1993. Analysts said this gives Necas a unique chance to push ahead the long-neglected reforms, aimed at coping with rising health care and pension costs caused by a rapidly ageing population and the higher cost of modern medical treatment. The parties have agreed not to raise taxes, and rather to cut spending to narrow the budget gap to 3 percent of gross domestic product by 2013 from 5.9 percent last year. The coalition has agreed to raise payments for healthcare and launch pension reform, putting more emphasis on private savings. Necas is a conservative keen on close cooperation within the NATO alliance but wary of any closer European integration. The government will be sceptical towards proposals for more financial regulation, incoming Finance Minister Miroslav Kalousek said told Reuters earlier this month. President Vaclav Klaus will appoint Necas's 14 ministers on Tuesday, and the cabinet will immediately take over from caretaker Prime Minister Jan Fischer, who has led the country since a previous centre-right cabinet fell in March 2009. The new cabinet has to win a confidence vote in the lower house of parliament within 30 days of its appointment, which will be a formality after the conclusion of the coalition agreement. The parties have also promised to cut the 2011 budget deficit to 4.6 percent of GDP from 5.3 percent planned for this year.
