* Finance minister raises borrowing estimate
* Deep spending cuts needed for 2010
* Leftists propose softer approach
By Jan Lopatka
PRAGUE, May 24 (Reuters) - The Czech government will have to hike borrowing this year to cover a sharply higher budget gap widened by economic decline, finance minister Eduard Janota said on Sunday.
Janota said in a television debate that gross borrowing could reach as much as 280 billion crowns ($14.7 billion) this year, more than double the original borrowing plan and also above previous forecasts.
The Czech Republic has not suffered a financial system meltdown thanks to a stable banking sector, relatively low foreign debt and low current account gap.
But its export-driven economy has suffered badly from a collapse of demand in Germany and other key markets.
Janota said the borrowing was necessary to finance the 2009 central budget gap, which the government sees at about 150 billion crowns, four times the planned 38.1 billion, as the economy shrinks by more than 2 percent.
The government has already been borrowing heavily this year both on the domestic market and through a 1.5 billion euro eurobond, in part to roll over about 100 billion crowns in maturing debt.
"Of that 280 billion (crowns), we have already issued about 180 billion, so about 100 is left for the remaining part of the year," Janota said.
The Finance Ministry said on May 4 it would need to borrow about 90 billion crowns more in the rest of the year, and has since already sold 19 billion worth of bonds to investors in three domestic auctions.
In December, the ministry had planned 132.6 billion crowns domestic and foreign borrowing.
DEEP CUTS PLANNED FOR 2010
Janota, a former deputy minister in charge of state budget who took office in a caretaker cabinet on May 8, said he would propose a public sector wage freeze and 5-20 percent cuts in discretionary expenditure at all government departments to keep the central budget deficit at 160-170 billion crowns next year.
The central government deficit is the main part of the overall public sector fiscal gap. A shortfall of 170 billion crowns in the central budget alone would equal about 4.6 percent of gross domestic product.
The cabinet will step down after an early election planned for October, and the final touches to the 2010 budget will be made by a new parliament and a new cabinet.
The leftist opposition Social Democrats, who lead opinion polls, said they saw higher deficits than 150 billion crowns on central government books in coming years.
"I would consider it very useful if we keep the state budget deficit below 200 billion (crowns) this year, next year and the year after," Social Democrat finance speaker Bohuslav Sobotka said in the television debate.
Sobotka said he wanted to hike wages to match inflation, seen at about 2 percent, and also did not want to halt infrastructure projects. (Reporting by Jan Lopatka; Editing by Dan Lalor)