Billionaire Finance Minister Questions Czech Cabinet's Fate

  • Government parties disagree over legislative proposals
  • Babis calls his coalition partners' approach `treachery'

Billionaire Czech Finance Minister Andrej Babis questioned the future of the ruling coalition on Monday because of a disagreement over draft laws, including one that may force him to surrender control of his companies, news website iDnes.cz reported.

Babis, the Czech Republic’s second-richest person with assets including chemical, agriculture, and media businesses, condemned the approach by the coalition’s other two parties as “treachery” and accused them of teaming up with the opposition against him.

“I’m beginning to wonder whether this coalition can continue functioning,” iDnes.cz, the website of Babis-owned Mlada Fronta Dnes newspaper, cited him as saying in Prague. “It has worked normally for two years and suddenly the coalition is proposing, with the opposition, various laws against me.”

The bickering underscores the long-strained relation between Babis, Prime Minister Bohuslav Sobotka’s Social Democrats and the junior ruling Christian Democrats as the three have quarreled about issues such as welfare spending and taxes since they took power two years ago. Despite the tension, the government has agreed to boost pensions and infrastructure spending while cutting the budget deficit, which has helped drive Czech borrowing costs to record lows.

Economic Recovery

Sobotka’s cabinet has benefited from an accelerating economic recovery after it reversed an austerity drive imposed by a previous government that exacerbated a record-long recession. The yield on the 10-year government bond fell to 0.332 percent on Monday, the lowest ever, and was trading 23 basis points over German state debt with similar maturity, according to data compiled by Bloomberg.

The coalition’s latest disagreement is about road-toll and gambling legislation. Babis’s two partners, which have called on him to sell his business concerns, have said they’ll consider supporting an opposition proposal seeking to block cabinet members from directly owning companies.

Babis, a former Communist-era trade official with a fortune of at least $2.2 billion, according to the Bloomberg Billionaires Index, has fought off allegations of conflict of interest. He says he isn’t running his empire, which includes 250 companies and employs 34,000 people in 18 countries.

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