Czech Republic: Prime Minister Necas resigns over corruption scandal
July 3, 2013
Politics took centre stage once again, when Petr Necas announced his resignation as the country's prime minister and leader of the Civic Democratic Party (ODS) on 17 June. Necas resigned after his closest aide was charged with corruption and abuse of power. Following Necas' resignation, President Milos Zeman appointed Jiri Rusnok as the country's caretaker prime minister. Rusnok is a left-wing independent, who previously served as finance minister in an administration led by Zeman from 2001 to 2002, leading most political parties to criticize the appointment as a power grab by the president.
Currently, Rusnok is assembling his cabinet, which is expected to be appointed by President Zeman on 10 July. One of the key tasks of the caretaker government will be to draft the 2014 budget. However, getting parliamentary approval for the budget will be difficult, as so far no party has declared its support for the caretaker administration. Only the Communists and a small centrist party have signalled that they may provide their votes. If Rusnok loses the confidence vote, he would have to resign, and President Zeman could then appoint another prime minister. However, since the constitution sets no time limit to do so, Rusnok could still serve for several more months, leaving the country in a prolonged period of political instability that would cripple policymaking, undermine investor confidence and hamper efforts to pull the economy out of its prolonged slump. A more likely scenario is that a lost vote of confidence would trigger snap elections as early as September, well ahead of the regular elections scheduled for May 2014.
Author: Ricardo Aceves, Senior Economist