If one were to believe the noise coming from right-of-centre politicians in Prague, the Czechs are on the brink of a Greece-style budget meltdown, and victory by the leftist Social Democrats in a May 28-29 election would plunge them into economic collapse.
An ad in newspapers this week from the right-wing Civic Democrats (ODS) showed masked Greek rioters in front of a burning barricade. “Socialists in Greece – the same as in the Czech Republic”, the headline read. Alongside, a picture of Jiri Paroubek, leader of the Social Democrats (CSSD) bore the caption “CSSD = State Bankruptcy”.
The ad angered the Greek embassy, which summoned ODS’s campaign manager to complain. It also puzzled many analysts as to why a country with relatively sound economic fundamentals could be worried about national bankruptcy in the short term.
The Czechs run in the middle of the pack in terms of European Union budget deficits, and they have one of the bloc’s smallest debt piles overall – only 35.4 percent of gross domestic product, compared with an EU average of 73.6 percent.
On the other hand, they suffer acutely from a fiscal risk common to many EU states. The ageing Czech population is for the first time threatening the country’s unreformed pension and healthcare systems with billion euro deficits each year – a trend that economists say will only worsen unless policymakers reform the systems now.