The Czech government is resigning after a dispute with the finance minister


sobotka
Prime
Minister of the Czech Republic Bohuslav
Sobotka.

Ints
Kalnins/Reuters


Czech Prime Minister Bohuslav Sobotka said on Tuesday he would
resign along with the whole cabinet in response to a row with his
Finance Minister Andrej Babis.

Sobotka said the resignation would allow a reformation of the
cabinet with the same three-party centre-left coalition but
without Babis — or lead to an early national election.

His announcement comes less than six months ahead
of the next parliamentary elections, which are scheduled for
October.

The Czech koruna dipped by about 0.4% in the immediate aftermath
of the announcement, but has since retraced its losses. It is
little changed at 24.6510 per US dollar as of 9:52 a.m. ET.

“It seems unlikely that this political realignment will have a
significant impact on the economy or financial markets. The
stability of Czech politics over the past three years has been
the exception rather than the rule,” William Jackson, senior
emerging markets economist at Capital Economics, said in a note.
Prior to that, governments changed frequently. But that
was never marked by sell-offs in the markets or sharp swings in
the direction of policymaking.”

“And unlike in other emerging markets where political
instability is a concern, there are no major fiscal issues to
tackle in the Czech Republic that might otherwise require a
stable government,” he added. “Indeed, if anything fiscal policy
has been too tight.”

The Czech Republic has seen the turnover of six cabinets in
the past decade,
according to Bloomberg data
. But it has seen three
years of relative stability under Sobotka’s coalition
government,
according to the
BBC.
 

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