LANY, Czech Republic (Reuters) - The Czech president has advised Prime Minister Andrej Babis to try to negotiate a new government with two fringe parties after coalition talks with the Social Democrats collapsed, Babis said on Tuesday.
President Milos Zeman recommended that Babis, a billionaire businessman who leads the ANO party, should revive his previous attempts to form a coalition with the Communists (KSCM) and far-right, anti-European Union SPD party.
Babis won an election last October but has yet to muster enough support to win a parliamentary confidence vote. Talks with the Social Democrats, who led a previous coalition government that included ANO, fell apart last week in a row over ministries.
“The president recommended to me to continue negotiations with KSCM and SPD,” Babis told reporters after meeting Zeman at the presidential retreat in Lany, 40 km (25 miles) west of Prague.
A number of parties have shunned Babis mainly due to criminal charges which he is facing over an alleged fraud of EU subsidies worth 2 million euros ($2.5 million) a decade ago. He denies any wrongdoing.
However, the two fringe parties are problematic as the Communists want the Czech Republic to leave the NATO defense alliance and SPD has called for the country to quit the EU, pushing for a referendum similar to when Britons voted for Brexit in 2016.
Babis said the ANO leadership will meet probably on Thursday to decide how to proceed.
His minority government lost a confidence vote in January and has been ruling in a caretaker capacity since then.
Financial markets have largely shrugged off the protracted political stalemate - which is not unusual in Czech politics - with the economy roaring ahead and public finances in surplus.
Reporting by Petra Vodstrcilova; Writing by Robert Muller; editing by David Stamp