Positive Fiscal Outlook But Risks Remain

We hold to our constructive outlook on the Czech Republic's fiscal position and forecast that the general government deficit will fall to 4.1% of GDP, from 4.7% in 2010. We expect that austerity measures imposed by the centre-right coalition government will bring down full year expenditures by 0.5% this year. However, revenues will also be squeezed and we expect these to rise by only 0.4% this year.

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