Prague - The Czech Republic's centre-right government Monday approved a set of fiscal measures aimed at softening the economic slump's effects on the country's export-driven economy.

Prime Minister Mirek Topolanek told a news conference that the package and earlier pro-export measures adopted in late 2008 would cost taxpayers 1.9 per cent of gross domestic product, or some 70 billion koruny (3 billion dollars).

The premier said that the plan counts on a prediction that the country's economy would contract by 1 per cent.

"We are working with a scenario of a decline of 1 per cent or more" although the current forecasts are closer to zero, he said.

As a result of the expected recession, the 2009 budget gap is to "significantly" exceed 3 per cent, a European Union requirement for adopting the euro, Topolanek said.

Officials said earlier that the deficit would hover at around 3 per cent - a euro-friendly rate - if the economy grows 1 per cent this year, a rate now seen as unrealistic.

The list of 16 measures includes plans to preserve employment through welfare insurance deductions. The cabinet aims to spur business investment with speedier write-offs and suspending advance payments on tax.

The state would also provide bank loan guarantees for entrepreneurs and small businesses. More public money would be spent on road construction and subsidies to heatproof buildings.

The government, which has long opposed spending taxpayers' money on kick-starting the economy, is to publish details of the package on Wednesday.

While Topolanek's three-party government may introduce some of the measures by executive order, others require parliamentary approval and may face hurdles in parliament's lower house, where the premier lacks a majority. (dpa)