Leaders in the governing coalition left a March 20 meeting on pension reform touting the compromise they'd reached as a victory. 

Analysts, however, say that the coalition pushed back real reform for years and is jeopardizing the country's fiscal health and international economic standing. 

At the meeting, the coalition parties agreed to establish by the end of April an expert commission to recommend ways to fix the collapsing pension system. 

Representatives of coalition parties also said, however, that each party will go to the parliamentary elections in 2006 with its own pension-reform proposal and that the election winner will pursue its project after the elections. 

The system can't wait that long, economists say. 

Last year, the government paid 226 billion Kc ($8.37 billion) on pensions, some 28 percent of the 808.7 billion Kc state budget expenditures. Overall, the budget included a deficit of 115 billion Kc. 

The Finance Ministry announced March 17 that the country's debt grew by 97.3 billion Kc to 493.2 billion Kc in 2003. 

The European Union's statistical agency, Eurostat, reported that Czech public debt reached 956.2 billion Kc -- 37.6 percent of gross domestic product (GDP) -- last year. 

Czech debt, increasing pension costs, an aging population and a low birth rate form a deadly combination, economists say. 

"The good thing is that foreign investors are so far willing to ... refinance the country's debt," Ceska sporitelna analyst Helena Horska said. "But it could well happen in the long-term that they'll lose their patience with the government and will stop. Then the government could face a virtual state bankruptcy similar to Argentina a couple of years ago." 

Volksbank chief economist Marketa Sichtarova said that should the state debt rise at the current pace, the Czech Republic will not be capable of adopting the euro by 2009. A country's debt must not exceed 60 percent of GDP to adopt the euro, according to EU criteria. 

Horska said that the government has little time left to find a way out of the pension crisis. "The threat is imminent, and the government is running out of sources for covering the increasing deficits," she said.