PRAGUE, May 8 (Reuters) - Czech President Vaclav Klaus appointed an interim government on Friday which will lead the country to an early election, ending a political crisis that crippled the country's EU presidency and policymaking amid a sharp economic downturn.
The cabinet, led by non-partisan Jan Fischer as prime minister, replaces a centre-right administration of Mirek Topolanek, overthrown in a no-confidence vote in late March.
Below are key issues for Fischer's team to handle.
For story on the cabinet appointment, click on [ID:nL81015812]
* 2010 STATE BUDGET
Finance Minister Eduard Janota is charged with drawing up a 2010 state budget amid an economic crisis that hikes welfare spending and curbs tax and social insurance revenues, key income for the state coffers.
Janota said he aimed to put together a central state budget with a deficit lower than this year's expected 150 billion crowns ($7.55 billion).
He said he would make 10 percent across the board cuts in government expenditures to avoid a public finance collapse.
This year's total public sector gap could reach 4.5 percent of gross domestic product (GDP) but in the absence of saving measures the gap could hit 6.7 percent next year of total output, Janota had warned.
Analysts say Janota's job to keep the budget gap under control could be tough in the run-up to October elections as parties make large spending promises.
The Finance Ministry expects the economy to shrink by 2.3 percent this year.
* EU PRESIDENCY
The Czech Republic holds the six-month EU presidency until June, with the bloc struggling to address the economic crisis. The Czechs' presidency role has been tarnished by the government collapse, and some EU nations have since given a cold shoulder to Czech initiatives.
The Czechs held a string of summits in Prague this week, including one with heads of state from the EU and six former Soviet countries, which was however not attended by some key EU figures such as French President Nicolas Sarkozy.
* PRIVATISATIONS
Fischer's administration is expected to continue
privatisation of Czech Airlines (CSA) estimated to be worth up
to 5 billion crowns. The process is now in a second phase after
KLM-Air France
The ongoing sale of the Prague Airport worth up to 100 billion crowns should be completed by a government coming from the October election.
Fischer said he was not keen on making any big government deals and his cabinet had no political ambitions.
* CRISIS MEASURES
The outgoing cabinet led by Topolanek and his centre-right Civic Democrats proposed and partially implemented anti-crisis measures worth 73 billion crowns, aimed at freeing up cash flow and credit for businesses.
The plan is focused on companies' rather than people's income, based on an assumption that the Czech small and open economy is highly dependent on exports and stimulating domestic demand would have a negligible effect.
Many of the proposed measures, including a cut in social security payments are yet to be approved by parliament, and some are up to the new cabinet.
The leftist opposition proposes a 45-billion-crown ($2.22 billion) stimulus package including more demand-side measures such as a scrap subsidy for old cars and higher welfare spending.
The two main parties in parliament have agreed to support each other's plans, but some of them -- such as the scrap penalty -- face opposition in the cabinet.
* EARLY ELECTION
Fischer's technocrat cabinet will prepare an early election in October. Opinion polls showed in March the leftist Social Democrats extended their lead over the ruling Civic Democrats after toppling the cabinet in the no-confidence vote.
The Civic Democrats ruled in coalition with the centrist Christian Democrats (KDU-CSL) and the Green Party since January 2007.
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(Compiled by Jana Mlcochova)