Government unveils CZK 8 trillion National Investment Plan to be fulfilled by 2050

17-12-2019

Referred to as a key document, the government’s National Investment Plan has been years in the making. On Monday, the long awaited concept was finally unveiled. It counts on some CZK 8 trillion being spent by 2050 on investments in all branches of state infrastructure. The prime minister says it could help in EU funding negotiations with Brussels. However, the opposition has mocked it as a simple wish list with no clear implementation strategy.

Andrej Babiš, photo: ČTK/Kateřina ŠulováAndrej Babiš, photo: ČTK/Kateřina Šulová Out of the altogether 22,000 investment projects, the main bulk of the money, over 77 percent, is to be spent on transport.

The plan cites a World Economic Forum report which ranks Czech roads as among the worst in the European Union, despite their relative density. To remedy this situation it prioritises road and rail infrastructure, while also stressing “clean” mobility elements such as the promotion of charging and pumping stations for vehicles running on alternative fuels.

Ahead of transportation in terms of strategic priorities set out by the government is investment in industry, construction and raw materials security.

Some 5.3 percent of the plan‘s overall funding is marked out for this sector. Particular emphasis is placed on boosting competitiveness through investment into what is commonly referred to as Industry 4.0 - the expected robotisation and digitisation of production.

Energy is set as the third priority and includes plans to spend some CZK 300 billion on the construction of two new blocs in the Temelín and Dukovany nuclear power plants.

Individual projects are divided by the ministries which carry responsibility for their implementation. On Monday, Prime Minister Andrej Babiš described how he envisions the actual process going ahead.

Photo: Michal Klajban, CC BY-SA 3.0Photo: Michal Klajban, CC BY-SA 3.0 “I expect ministers to promote these individual investments in future budget negotiations in order to find the funding for them.“

He says the plan will also play a role in future negotiations about the EU budget for 2021 – 2027, enabling the country to present concrete projects that could be supported by funding. However, members of the opposition have criticised the plan for lacking any real details on the implementation schedule and sources of financing.

Mayors and Independents Chairman Vít Rakušan called it a “wish list” on Twitter, while the head of the Pirate Party’s deputies club Jakub Michálek says the plan lacks details on which investments will go ahead.

„The problem of the Czech Republic is not that it doesn’t have a list of options, but rather that investments are not folowed through.“

Štěpán Křeček, the chief economist of BH Securities, a licensed securities trader on the Prague Stock Exchange, notes what he sees as a lack of sufficient housing investment in the government plan.

Nevertheless, he believes it is good that there is now a clear list of specific projects marked out for investment.

The National Investment Plan can be viewed in Czech on the government’s official website: www.vlada.cz/assets/media-centrum/aktualne/Narodni-investicni-plan-CR-2020_2050.pdf

What is important now, he says, is to start as soon as possible and take advantage of favourable market conditions.

“The Czech National Bank is quite unique in the European Union. Our interest rates are set considerably higher than in Eurozone countries for example. There is also a prediction that the Czech crown is likely to strengthen towards the euro.

“It is due to these reasons that I believe it would be useful to finance these projects through Eurobonds. We would make use of the interest rates while at the same time our repayments could be done when the crown’s value is at a higher rate to the euro.“

17-12-2019