Officials are increasingly looking at privatizations as a way to rein in a budget deficit projected to top out at 91.3 billion Kč ($4.1 billion) in 2007— big enough to push the country's adoption of the euro beyond 2010.

"There is no available money anywhere, so we need to count on potential revenues from potential privatizations," said Finance Minister Vlastimil Tlustý.

There is some evidence that this might work.

Prime Minister Mirek Topolánek made a last-minute decision Sept. 25 to privatize a part of state-controlled power giant ČEZ, which allowed his Cabinet to trim almost 31 billion Kč off the deficit.

Among the remaining state-owned companies to be privatized are ČEZ, Prague Airport, Czech Airlines, jet manufacturer Aero Vodochody and the Czech postal service.

It seems likely that privatizations will get bogged down in the current political mire. None of the parties currently wrestling for control of the government — notably the Social Democrats (ČSSD) and Civic Democrats (ODS) — can agree to what extent the privatizations should be carried out.

When the Chamber of Deputies starts debating the draft of the 2007 state budget later this month, privatization is expected to be just one more point of contention between June's election winner, the ODS, and the opposition ČSSD.

At issue is not whether to privatize, but rather what to privatize first and what to put on hold.

The ODS's move on ČEZ is a case in point.

ČSSD leaders said they did not agree with the sale of ČEZ shares. They wanted, instead, to sell off Prague Airport first.

"If the ODS insists on privatizing ČEZ, they can forget about our votes for their state budget draft," ČSSD Chairman and former Prime Minister Jiří Paroubek said.

Not an ideal solution

Most business analysts agree that using revenues from privatizations to reduce the country's budget deficit is not ideal — since the money should really be used toward public-finance reforms. But they also acknowledge that it will be difficult for politicians to turn away from what appears to be easy money.

"Privatizations are advantageous for the government since it can get quick money," HVB economist Pavel Sobíšek said. "On the other hand, it's alarming when privatization yields need to be used for lowering the state budget deficit in times of a booming economy."

When drafting the 2007 state budget last month, Tlustý said selling off the state's remaining assets could help keep the budget deficit under 100 billion Kč.

"Although it's far from being ideal, we'll need some privatization revenue for bolstering the cash-strapped coffers," Tlustý said when presenting a draft of the budget to the public last month.

The ČSSD, for its part, will push to sell off the state's 49 percent stake in Prague Airport. The ODS agreed late last month that the airport should soon change into a publicly traded company in order to speed up its privatization.

Airport Director Hana Černochová said potential investors have already eyed the facility, and about 10 would-be investors have already made inquiries.

Privatization needed

The need for some fast privatizations became imminent after the Czech Statistical Office (ČSÚ) announced Oct. 3 that next year's deficit could hit 110 billion Kč, far higher than the ČSSD had predicted this summer when they were in power. High spending in the health and social sectors are being blamed for the deficit.

As a result, the share of the state budget deficit on gross domestic product will increase to 3.6 percent, and the country will for the first time exceed what is allowed under the European Union's guidelines for the country's scheduled adoption of the euro.

Finance Minister Tlustý said that while cuts in expenditures were essential for slashing the deficit, the government has to speed up some privatizations as well.

The failure of Topolánek's Cabinet to win a vote of confidence in Parliament Oct. 3 could bring about delays in the privatization of most companies, Industry and Trade Minister Martin Říman said.