Czech president Vaclav Klaus appointed a new cabinet today, handing power to a centre-right coalition pledging to cut the budget deficit and fight widespread corruption.
The appointment wraps up six weeks of talks on forming a government after the three coalition parties won 118 seats in the 200-seat lower house of parliament in a May election.
Prime minister Petr Necas, leader of the right-of-centre Civic Democrats, has pledged to cut the budget gap to 3 per cent of gross domestic product by 2013, from 5.9 per cent last year.
President Vaclav Klaus said the cabinet was taking over in tough economic times and amid uncertainty over European integration, but had a strong mandate.
"I believe your government will be stable," he told ministers at the appointment ceremony.
"It has a great precondition for that, the biggest majority in the lower house in the modern Czech Republic's modern history. That is certainly a good foundation for you to resolutely, decisively and courageously start the very much needed reforms."
The export-dependent Czech Republic has suffered from a drop in west European demand in the economic crisis, but has been recovering with the revival in Germany, the key trading partner.
The Czechs have debt at around half the European average, but need to reform their pension, social and healthcare systems to avoid a fast growth in borrowing in the years ahead.
Economists welcomed the new government make-up, saying its pro-market and fiscally conservative stance would benefit the economy.
One concern is the stability of the smaller coalition partners, the conservative TOP09 and the centrist Public Affairs. Both parties won parliamentary seats for the first time ever, and especially leaders of the Public Affairs have thin track record in politics.
The new cabinet's first task will be to prepare an austere 2011 budget draft to meet a pledge to cut the deficit to 4.6 per cent next year. The parties have agreed not to raise taxes, and rather to cut spending to narrow the gap.
The coalition has agreed to raise payments for healthcare and launch pension reform, putting more emphasis on private savings.
Mr Necas is a conservative keen on close co-operation within the Nato alliance but wary of any closer European integration.
The government will be sceptical towards proposals for more financial regulation, incoming finance minister Miroslav Kalousek said earlier this month.
The new cabinet has to win a confidence vote in the lower house of parliament within 30 days of its appointment, which will be a formality after the conclusion of the coalition agreement.
Reuters