Czech Republic

The Febiofest film festival, which took place annually in Prague and other Czech cities and towns, is now in a state of bankruptcy, Czech Radio reported on Sunday. The founder of the cinema showcase, Fero Fenič, filed bankruptcy proceedings against the company which now owns it, saying that he did not receive payment after selling the festival and is owed CZK 4.5 million. The festival, which was created in 1993, did not take place this year. Read more.

The Czech central bank signaled that concern over inflation risks overshadows a weakening economy for now as policymakers left the door open to an interest-rate cut next month, Bloomberg News reported. The monetary panel voted to keep the benchmark rate at 7%, even as two out of seven members sought a quarter-point reduction. Governor Ales Michl said most central bankers decided to keep the policy “at a very restrictive level” to prevent excessive wage demands from triggering an inflation spiral.

The Czech government will scale back a planned loan from the European Union's post-COVID recovery fund to 19.4 billion crowns (805.75 million euros), from the initially planned 137 billion crowns, Industry Minister Jozef Sikela said on Wednesday, Reuters reported. The reductions were made after consultations with the European Commission, which concluded some of the funding Czechia needs could come from other channels, Sikela said.

The Czech government approved on Wednesday a bill allowing the taxation of large multinational companies which tend to book their profits in countries with a lower tax burden, Reuters reported. The bill affects firms whose annual revenues exceeded 750 million euros ($817.05 million) in at least two of the past four years. The aim is for multinationals to pay a profit tax of at least 15%. "We will join countries which refuse to allow corporate profits to be diverted into tax havens," Finance Minister Zbynek Stanjura said during a televised press conference.

The Czech economy is struggling to recover from a short recession as high interest rates and shrinking real wages curb consumption, spurring a debate about when monetary easing should start, Bloomberg News reported. Gross domestic product grew 0.1% in the second quarter from the previous three months, less than policy makers expected, according to a flash estimate published by the Czech Statistics Office on Monday. The economy shrank 0.6% from a year earlier.

Czech citizens will likely pay more for beer and medicine while businesses will face higher corporate taxes as part of a package of dozens of measures designed to keep the ballooning budget deficit under control, the government said today, the Associated Press. Prime Minister Petr Fiala said the proposed cuts, tax increases and austerity measures are necessary because the pace of the debt rise is “threatening.” Fiala said the measures should reduce the budget deficit for 2024 by 94 billion Czechs crowns ($4.4 billion) and for 2025 by 148 billion.

The Czech central bank warned it may have to raise borrowing costs if home-grown inflation risks escalate, calling investors’ bets on monetary easing “premature.” The koruna gained, Bloomberg News reported. Policy makers kept the benchmark rate at 7% on Wednesday, but the vote was tighter than before, with three out of seven board members seeking a quarter-point increase. Governor Ales Michl said the current policy setting is already taming domestic demand, pointing to slowing credit growth and a cooling property market.

The Czech central bank sought to correct investors’ expectations about when it may start easing monetary policy, calling bets on summer rate cuts “premature.” The koruna gained, Bloomberg News. The bank held the benchmark rate at 7% on Wednesday, where it has been since new leadership halted rapid hikes last summer. Policy makers also maintained a commitment to prevent major currency swings, which has helped the koruna outperform its regional peers in the past year.

The Czech Republic held borrowing costs at the highest level since 1999 as the central bank expects a looming recession to curb the worst inflation in three decades, Bloomberg News reported. Policy makers left the benchmark rate at 7%, keeping it stable for a third meeting after the bank’s new leadership halted a year of rapid monetary tightening. The bank also said it will maintain its intervention policy of preventing excessive koruna swings, which has helped the currency outperform regional peers this year.

The Czech Republic will convene an emergency meeting of European Union energy ministers on Sept. 9 to find a bloc-wide agreement on tackling surging power costs, potentially through capping the price of gas used in electricity production, Reuters reported. Europe's electricity costs have soared since Russia curbed gas supplies to Europe, sending prices of the fuel sharply higher, and there are fears Moscow could cut flows further in retaliation for Western sanctions over its invasion of Ukraine.