Second richest man in the Czech Republic rescues its economy

The Minister of Finance of the Czech Republic, Andrej Babis had promised to "regularize" the country's finances in the same way that it runs his 12 billion dollar business. He is probably not doing too badly if one takes into account that after three months, Czech government bonds record lower yields since last May.

Babis, the second richest man in the Czech Republic and owner of production company of chemical and foods Agrofert, has been putting pressure on companies, which are controlled by the state, to pay greater profits to the state, investing  untapped public funds in the money market, while he goes against PM Bohuslav Sobotka's calls for increased spending. In this way, Babis considers that the budget deficit will fall to 1.8% of GDP this year against the former target of 2..9%.

As transmitted by Bloomberg, Sobotka and Babis, leaders of the two largest parliamentary parties, are trying to overcome their political differences and combine measures to support growth and fiscal responsibility, a year after leading the economy out of the longest recession it has known.

The performance of the Czech euro bond, which expires in May 2022, fell by 45 base points since the 29th of January, when the cabinet was formed, while it fell to the lowest point within 11 months, at 1.95%.

The tripartite coalition government is trying to reverse the austerity politics that Petr Necas had adopted between 2010 to 2013. While Necas' spending cuts had contributed to the country having a lower cost of borrowing in emerging Europe, they have exacerbated the economic recession and unemployment had increased to a record level.