Sale of fighter jets not to impact ČR's foreign trade, experts say

Prague, Oct 12 (CTK) - The sale of L-159 fighter jets by the Czech Republic to Iraq will not significantly influence Czech foreign trade and the impact of the transaction on the trade balance will amount to several percent at most, analysts have told CTK in a poll.

The Czech Republic has agreed with Iraq on the delivery of 28 two-seat L-159 fighter jets. The value of the contract is around $1bn (about Kc19.2bn).

"The transaction with the planes, if it is concluded, will improve the foreign trade balance by an estimated Kc10bn. But export will be spread into a longer time period and the size of the contract is not of key importance for the Czech economy," UniCredit Bank analyst Pavel Sobisek said.

However, Sobisek indicated that the contract could create space for further trade deals with the L-159 fighter jets which the state has not been able to sell abroad until now.

"If the deal opens the door for further transactions in the future, the Czech industry, and consequently the entire Czech economy, could benefit significantly from the development," Sobisek said.

Martin Prokop, an analyst at company Next Finance, said the sale could have a certain influence on the Czech economy if several factors work together.

"If we expect that all planes will be supplied next year and that the amount of the foreign trade surplus would stagnate without this transaction, the transaction would help raise the total surplus by around 6 percent," Prokop said.

If this happened, the transaction could create demand for the crown and exert pressure on the strengthening of the Czech currency, he added.

Twenty-four of the aircraft, produced by company Aero Vodochody, will be new ones and four will be fighter planes owned by the Czech military, Czech Defence Minister Alexandr Vondra said.

The first of the four Czech military's jets will be transferred to Iraq seven months after the contract takes effect, Vondra said.