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PRAGUE, Jan 2 (Reuters) - The Czech budget deficit shrunk much more than planned in 2008, leaving the government a cushion to tackle fallout from the global economic downturn, the Finance Ministry said on Friday.
Unlike many of the Czech Republic's western European Union peers, who are trying to spur their economies out of recession and back to growth with publicly-funded stimulus packages, the Czechs have taken pains to keep state spending in check.
The Czech central state budget showed a 19.4 billion crown ($1.02 billion) deficit for January through December of 2008, its lowest in 11 years and versus a 66.39 billion crown deficit in 2007.
The ministry had for much of the year expected a slightly smaller budget gap than the 70.8 billion crowns in the 2008 budget plan, but on Thursday the prime minister and finance minister said the deficit would come under 20 billion crowns.
"The figure is a result of government fiscal discipline and executed reform steps, which after years of unnecessary spending has prepared government finances for a possible crisis scenario," the ministry said.
"Space has been created for 2009 for possible fiscal impulses that would moderate impacts from the economic crisis."
The deficit reached 1.2 percent of Czech gross domestic product (GDP), confirming earlier forecasts.
The Czech economy had grown at around 6 percent in each of the previous three years, but the ministry sees 2008 growth dropping to 4.4 percent before falling to 3.7 percent in 2009.
However, many outside agencies expect economic expansion to slow much more this year in line with regional neighbours Poland and Hungary as euro zone demand for the region's goods fades, which would put the government's planned 38.1 billion crown state budget deficit in jeopardy this year.
Government officials have indicated the government is ready to boost the economy if growth falls below 2 percent this year.
"We have created ... assets reserves (equal to) 1.5 to 2 percent of (GDP)," Prime Minister Mirek Topolanek said on Czech TV on Thursday. "And we are able, in case the economy drops below 2, or possibly 1 percent (growth), to use this money."
For full table, double click on.............[ID:nPRA002290] (Reporting by Jason Hovet; editing by Tony Austin)