* Bohuslav Sobotka leads centre-left administration
* Aims for closer ties with European Union
* Revival in growth will help keep deficit under control
* Coalition parties likely to clash over tax hikes
By Jan Lopatka
PRAGUE, Jan 29 President Milos Zeman appointed a
new centre-left cabinet on Wednesday, ending a seven-month power
vacuum that has hampered policy decisions that the Czech
Republic needs to boost recovery from its longest recession.
Zeman appointed ministers from three coalition parties who
formed a parliamentary majority after an early election in
The coalition, led by Prime Minister Bohuslav Sobotka, plans
to ease some fiscal restrictions imposed by the former
centre-right cabinet, bring the country closer to the euro zone
and clampdown on corruption - the election's main theme.
"I am convinced this government will bring the economic
growth, prosperity and the stability (the country) needs,"
Sobotka said after the appointment ceremony. "We want to pursue
a socially sensible and just policy."
Sobotka takes over from a caretaker administration that has
governed since a centre-right cabinet collapsed in a sleaze
scandal last June.
Social Democrat leader Sobotka, 42, wants to return the
central European country to the EU mainstream in contrast to the
eurosceptic course of previous cabinets. He aims to bring the
country closer to euro zone entry, although the coalition has
been vague on any timing.
"Hopes are rising after a long time that the Czech Republic
will stop playing the role of troublemaker in the European
Union," Jakub Janda from the European Values think-tank wrote in
The Social Democrats aim to raise taxes, below the EU
average but higher than in most new EU member states at around
35 percent of gross domestic product, to fund increases in
wages, pensions and welfare.
They plan to run budget deficits under the EU's 3 percent
limit, abandoning previous aims to eliminate deficit funding and
halt growth of debt, low by European standards at around 46
percent of GDP.
The budget will benefit from a gradual recovery from a
recession that started in 2011 and ended last year and which was
in part caused by the austerity policies of the previous
Any tax hikes, however, will be opposed by the ANO party led
by Finance Minister Andrej Babis, a billionaire businessman who
owns hundreds of firms in the food, chemical and media
industries. Debate over taxes is the most likely flashpoint for
the centre-left coalition in the months ahead.
The centre-right opposition criticises Babis - likened by
the media to Italy's Silvio Berlusconi - for conflicts of
interest he may face as the head of tax and regulatory
Sobotka, a soft-spoken lawyer and career politician, may
also be hampered by conflicts with President Zeman, a long-time
adversary. Zeman, a former leader of Sobotka's party, has little
say in the day-to-day running of the country but has a role in
foreign policy and the appointments of central bankers,
ambassadors and judges.
Zeman had said he had objections against some of ministers,
but in the end appointed all candidates proposed by Sobotka.
The government plans to join the EU's budget stability pact,
which the previous centre-right cabinet refused to sign, as the
only EU member country apart from Britain.
The cabinet will also need to tackle widespread corruption,
a major concern for voters and the main campaign call of Babies
centrist ANO party. ANO has already proposed a series of laws
aimed at increasing transparency in public contracts.