The Czech Social Democrats have reached an agreement to form a new coalition government with the centre-right Christian Democrats and Freedom Union. The Socialist leader, Vladimir Spidla, is expected to be appointed as the new Czech Prime Minister by the Czech President, Vaclav Havel, on 9 July.
The government coalition will have a small majority in the Czech Parliament. The Social Democrats gained 70 seats, and the centrist Christian Democrats 23 and the right-wing Freedom Union 8 out of 200 seats in Parliament.
Under the agreement, the Social Democrats will have ten ministries in the new government, and the other two parties six. The two small parties are expected to get only one key ministry, the post of Foreign Minister, which will probably go to the Christian Democrat leader, Cyril Svoboda. The two small parties might also get the ministries of transport, the environment, culture and justice.
The coalition partners have already agreed that they would aim to bring the budget deficit into the range of 4.9 to 5.4 per cent of GDP in 2006. That means that the Czech Republic will not be able to qualify for membership of the euro-zone two years after its accession to the EU, foreseen in 2004. A budget deficit below 3 per cent of GDP is required to adopt the euro. Mr Spidla said the country should adopt the euro in 2008, under the next government, to give the current government more time to restructure public finances.