In Business News: a major investigation reaching into the upper echelons of government will not negatively impact markets say analysts; the Agriculture Ministry revises the damage figure to the sector from recent floods; the Czech Republic moves up seven notches on KPMG’s VAT list; Czech companies could provide amphibious vehicles for Libya, E15 reports; the TOP 100 association releases its list of top Czech exporters last year.
Leading analysts in the Czech Republic agree there has been little impact on the financial markets related to an unprecedented police investigation and raid at the office of the government. The raid, which was launched early Thursday, saw several people taken into custody including a close aide close to the prime minister. Should the scandal pave the way for the fall of government, leading to either a caretaker cabinet or snap elections, market analysts expect the crown and state bonds to be affected only minimally and if so only in the short term. The head economist at Era Bank, Jan Bureš, told ČTK the crown was largely immune to political developments; he also pointed out that the national election was only a year away, so even if the process was speeded up, it would not have a negative impact.
The country’s agriculture minister Petr Bendl this week revised the figure for damage suffered by the agriculture sector due to recent floods which hit a number of regions in Bohemia to 3.3 billion crowns. In the agriculture sector, vegetable growers and fisheries were among the hardest hit. The Agriculture Ministry will activate so-called sleeper programmes aimed at helping deal with damages including affected infrastructure; Minister Bendl cited as an example the needed repair of damaged sewer systems.
The Czech Republic moved up seven notches to the 14th place in KPMG’s global chart of VAT rates due to the increase in the basic VAT rate to 21 percent this year, according to numbers released this week by KPMG. The average upper rate globally is 15.55 percent, KPMG said, while the average VAT rate in Europe stands at 20.5 percent. The tax burden on Czechs is significantly higher, the firm noted. In the EU, Hungary has the highest VAT at 27 percent. VAT rates are in place in more than 150 countries around the world and its importance as a budget revenue has risen for two decades, KPMG notes. The lowest VAT in the long term is in North America (5 percent on average) and the highest in the EU.
Several Czech companies have been negotiating a contract worth 1 billion crowns for the supply and modernisation of hundreds of amphibious armoured vehicles to Libya's military, the daily E15 reported, citing information by the firms as well as the Ministry of Foreign Affairs. Among the firms to reportedly benefit the most from the contract are Excalibur Army, Tatra and VOP CZ. The firms STV Group and Zeveta Bojkovice would also stand to benefit if ammunition was part of the deal. The Ministry for Foreign Affairs, however, has refused to allow the export of ammunition for fear it could end up in the wrong hands. The companies say this could thwart the deal.
In all, 350 amphibious armoured vehicles could be supplied to Libya along with amphibious BVP-1 tread vehicles; the firms are promising to also provide maintenance and new equipment for, the daily E15 wrote. An additional 300 vehicles already owned by Libya would be upgraded.
The country’s 50 largest exporters last year raised exports by 16 percent, surpassing the figure of one billion crowns. The largest exporter was Škoda Auto which last year boosted exports from 230.5 billion to 240.7 billion. The list of top exporters, released on Friday, is compiled annually by the Czech TOP 100 association. Last year the country’s second-largest exporter was RWE Česká republika. Other companies in the top ten include Agrofert Holding, Unipetrol and ArcelorMittal Ostrava.
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