Coalition talks
June 4, 2010
Czech President Vaclav Klaus has asked the leader of the Civic Democrats (ODS), Petr Necas, to lead talks with the conservative TOP09 party and the centrist Public Affairs party
The three parties won a combined 118 seats in the 200-member lower house in last weekend's elections, which could give a three-way coalition the largest majority of any government since independence in 1993.
The parties have been in talks since Monday, two days after the second round of general elections, when it became clear that although the Social Democrats won the biggest share of the vote at 22 percent, they had little chance of forming a government.
Fiscal discipline
One of the main objectives for the new Czech government is to produce a budget for 2011.
On Wednesday, the three center-right parties signed a declaration on their intention to form what they call a "government of budget responsibility, rule of law and the fight against corruption."
Although Czech government debt is among the lowest in the EU, it is set to grow over the next few years and there are fears that higher spending could lead to a Greek-style debt crisis
The Civic Democrats want to cut the deficit to between 4 and 4.5 percent of gross domestic product, which is a bigger reduction than the outgoing cabinet had planned.
But the party's promise not to raise taxes clashes with the Public Affairs Party's plan to raise corporate tax by 1 percent and increase the tax on high incomes.
The new government will replace a caretaker government led by Jan Fischer, which had ruled the Czech Republic for the last 14 months.
ng/Reuters/apn
Editor: Martin Kuebler