* Government pledges less fiscal restriction to help growth
* Three-party coalition wants more integration with EU, move
closer to euro
* Disagreement on tax hikes will make it tough to rasise
By Robert Muller
PRAGUE, Feb 18 The new Czech centre-left cabinet
won a required vote of confidence on Tuesday, receiving a
mandate to ease restrictive budget policies to boost growth and
bring the country back into the European mainstream after years
of euro sceptic cabinets.
Social Democrat Prime Minister Bohuslav Sobotka's
three-party coalition won 110 votes in the 200-seat lower house
His government was appointed formally by President Milos
Zeman on Jan. 29 and, under law, needed to win a confidence vote
within a month.
The Sobotka-led cabinet will fill a power void after the
fall of a centre-right administration in the middle of 2013. A
caretaker cabinet led the country after that but lacked support
to push any strong legislation through parliament.
Sobotka, 42, a former finance minister a decade ago, aims to
raise pensions and minimum wages after the austerity policies of
the previous cabinet, while keeping the budget deficit below 3
percent of gross domestic product, a softer target than previous
cabinets' plans to eliminate the deficit.
Sobotka will get help from an accelerating recovery in the
$200 billion per year economy after the central European
country's longest recession in two decades ended last year.
Powered by exports, gross domestic product jumped by a
surprisingly strong 1.6 percent quarter-on-quarter at the end of
2013. Economists see about 2.0 percent expansion this year.
Sobotka has pledged to end euro sceptic policies of his
predecessors, starting with the symbolic joining of the EU's
fiscal compact, an agreement on budget responsibility.
But he wants to delay implementing the pact's tough
conditions on structural deficit -- the part of the spending gap
that is not caused by the economic cycle -- that would force the
government to cut spending faster.
"This will be among the first issues the new government will
tackle," Sobotka told parliament ahead of the vote.
"We need to raise our influence in Europe, to be able to
secure our national interests, we cannot stand on the sidelines
but have to take part in the debate on what Europe will look
like in the years ahead."
The cabinet has also pledged to take steps to bring the
country of 10.5 million closer to the euro zone, although it has
made no commitment on any euro adoption dates.
TENSIONS IN CABINET
The approval of Sobotka's cabinet ends a period of
uncertainty that followed the collapse of a centre-right cabinet
in June last year in the midst of a corruption scandal.
The Social Democrats narrowly won an early election in
October, and took over two months to form a coalition.
The Social Democrats may face tensions in the coalition,
especially from the side of the new centrist ANO movement of
Finance Minister Andrej Babis.
Babis, a billionaire owner of hundreds of firms in the food,
chemicals and media sectors, faces accusations of massive
conflicts of interest.
He also opposes any tax hikes on companies, especially
utilities and banks, proposed by the Social Democrats, provoking
questions about where Sobotka will find money to pay for plans
to raise investments as well as pensions and wages.
The Czech Republic is used to unstable cabinets, having gone
through 11 prime ministers and 13 cabinets in the past 21 years.
Its borrowing rates are the lowest among central Europe as
investors have largely ignored political upheavals, given the
country's relatively low debt at around 45 percent of gross
domestic product and strong banking system.