President Klaus opposes loan

Prague, Dec 12 (CTK) - The Czech Republic should not provide any money for the International Monetary Fund (IMF) to aid the euro zone countries with the biggest debts, President Vaclav Klaus told Czech Radio yesterday.

Finance Minister Miroslav Kalousek (TOP 09) said this decision related to foreign policy rather than to the budgetary affairs. He added that the Czech Republic cannot afford to reject the EU's plan alone.

Klaus said such a step by the government would be irresponsible in the situation in which the Czech Republic itself was unable to get rid of its own debts.

When deciding on the participation in the European anti-crisis plan, the Czech Republic should not be guided by any fear of isolation, said Klaus, a trained, conservative economist with eurosceptical views.

"The Czech Republic itself lives with a deficit, which, as one can see, it is unable to eliminate. In this situation, it would be irresponsible to increase our debt by providing more loans to the extremely indebted countries, which would only allow for further postponement of real solutions," Klaus said.

The provision of further means for the IMF is a part of the package to rescue the euro, agreed on by European leaders at their recent summit on December 9.

The Czech Republic and other countries outside the euro zone have not yet decided to join the planned help.

However, Foreign Minister Karel Schwarzenberg admitted on Sunday that the Czech government would nod to the loan for the IMF in support of the fight against the economic crisis.

The Czech government does not have many other possibilities but to confirm to the IMF in a given deadline that it is willing to provide further sources within the measures to rescue the euro, Schwarzenberg said.

Out of the 200 billion euros in total, the Czech Republic should contribute with 3.5 billion euros (an equivalent of 89 billion crowns).

Kalousek said the Czech Republic will try to negotiate about lowering its contribution if possible.

"The Czech Republic must not and cannot be isolated in Europe. This would be a very steep path going down," Schwarzenberg pointed out.

"It is erroneous to narrow the freedom of our decision-making in advance by arguing that if we do not adopt the Brussels plan, we will be in isolation," Klaus said.

"We have experience enough by being scared with isolation in the past years. As a result, we are facing a European problem that is very difficult to resolve," Klaus.

The senior opposition Social Democrat (CSSD) chairman Bohuslav Sobotka said if the government decided to participate in the core of European integration, it could reckon with the CSSD's support.

Shadow finance minister Jan Mladek (CSSD) said it is a key Czech economic interest to prevent the euro zone disintegration.

Mladek criticised Kalousek for not showing a clear position on the issue.

He said the Czech Republic is only asked to earmark a part of its foreign exchange reservers to the IMF. Such an operation would not harm the country in any way since the IMF is a preferred creditor that can get back the money even from indebted countries, Mladek added.

Klaus criticised especially the conservative TOP 09 for nodding to increase the Czech debt.

Czech National Bank (CNB) governor Miroslav Singer said the bank would be difficult to make the decision whether to provide the 3.5 billion euros, which is about one-tenth of the country's forex reservers, for a IMF loan.

Klaus said he would welcome it, if, along with other countries, the Czech Republic indicated that it would not join the "bianco cheque."

He said the EU summit has not presented any plan that would have a direct impact on the debt crisis.

($1=19.037 crowns)