Still, the proposed 91.3 billion Kă ($4 billion) deficit will prevent the country from adopting euro by 2010.

The consent to sell a minority stake in âEZ, with an expected yield of 31 billion Kă, enabled the Cabinet to slash the 119 billion Kă deficit drafted by Finance Minister Vlastimil Tlustý. Also, the government agreed to increase wages for state employees by 5 percent and pay higher subsidies to schools, research-and-development universities and farmers.

Previous Finance Minister Bohuslav Sobokta drafted a budget with a 88 billion Kă deficit in June.

That proposal would have kept the deficit at 3 percent of gross domestic product (GDP), which would have allowed the country to meet one of its conditions for being eligible to adopt euro in 2010.

Tlustý said, however, that Sobotka used “accounting tricks,” such as including yields from privatizations that have not yet begun, to come up with the 88 billion Kă figure.

Whether the 2007 state budget draft will pass in Parliament in mid-October remains a big question.

Social Democratic Party (âSSD) leader Jiří Paroubek announced that his party did not agree with the sale of âEZ shares — which would reduce the state’s current 68 percent stake by about 7 percent. The âSSD instead wants to privatize 49 percent of Leti‰tű Praha, the company that administers Prague-Ruzynű Airport.

Tlustý said this was not possible, since Leti‰tű Praha first needs to be transformed into a public limited company with stocks that can be traded on the stock exchange.

The 91.3 billion Kă deficit would equal about 3.5 percent of the GDP next year. The program for euro adoption relies on a deficit no greater than 3.3 percent of GDP.

Prime Minster Mirek Topolánek and Czech National Bank Governor Zdenűk TŰma said Sept.19 a delay in euro adoption was likely and that the government still had to start key public finance reforms.

Economists predicted the Czech Republic could adopt the euro in 2012 at the earliest.