CZECHIA: Fiscal Council Chief Says Fight For Implementation Of Austerity Package Is Only Beginning

National fiscal watchdog head Mojmir Hampl, who served as CNB Deputy Governor until 2018, told public radio that the government's fiscal consolidation package is a "balanced and reasonable compromise," but the fight for its implementation is only beginning.

• Hampl observed that the largest austerity measure is the reduction of state subsidies for businesses, which means that "the government implements the biggest part in the area in which it can decide on its own without consulting the parliament and without changing the legislation."
• However, the official noted that the legislative initiatives forming the government's fiscal consolidation package involve changing 58 different laws, which may be a complex process. He added that measures such as tweaking VAT rates may have a non-trivial impact on prices.
• Meanwhile, Komercni banka wrote today that the austerity package will dampen overall inflationary pressures going forward but at the cost of slower economic growth. They estimate that the austerity measures will lower headline inflation by up to .4pp and GDP growth by up to 0.7pp in 2024.