Financial crisis: Prague’s prestigious projects jeopardized

The possibility of an end to Prague's Olympic plans, delays in construction of the underground railway, and hold-ups in the building of a Prague bypass: these are just some of the difficulties which the City of Prague is currently facing. The reason is the international economic crisis, which has led to a drop in taxation revenues of up to CZK 3 billion (EUR 112 million) in Prague.

Up until now, the Czech Republic was largely cushioned from the effects of the international economic and financial crisis compared to other countries. Whilst banks in Austria and other countries were issuing one disastrous warning after another, Erste subsidiary Česká spořitelna, the largest Czech bank, was reporting record profits. However, the initial effects of the crisis affecting the everyday lives of the Czech people are now becoming apparent. 

Prague’s Mayor Pavel Bém has announced that the metropolis on the Vltava River will have to expect a shortfall in taxation revenues in the amount of CZK 1.7 billion (EUR 64 million) for 2009. However, financial experts anticipate a far greater loss that could be up to CZK 3 billion (EUR 112 million). In the longer term, this will jeopardize not only prestigious projects like Prague’s Olympic candidature, but also urgently needed transport facilities.

Underground and bypass endangered

Two bypasses are currently under construction in Prague: an inner bypass round the extended city centre, and an outer ring road. The megaproject of the “Blanka” road tunnel is a part of the inner city bypass, running for 6.3 kilometres beneath the centre of Prague and the Vltava River. The tunnel is currently being built, and is devouring billions from the city’s budget. The total cost of the project is estimated to be CZK 30 billion (EUR 1.12 billion). The desperately needed "Blanka" tunnel is scheduled to be completed in the year 2011, a date that now no longer seems realistic due to the financial crisis. The tunnel is designed to bring massive relief to the traffic in Prague’s inner city.

Delays in the construction of the outer ring road are attracting international interest. The “outer ring” is being planned to link up the individual motorways with one another that currently end in or before Prague, and this will be of tremendous importance to Central European transit traffic. In the future, the East-West link from Brno to Pilsen and the North-South link, which is a part of the Vienna-Berlin route, will run entirely via urban motorways. Crossing Prague from North to South at the present time means driving through the city centre, resulting in traffic jams and delays at rush hour.

Competitiveness of Prague Airport at risk

Not only road traffic, but also public transport faces delays in new projects. The extension of Prague’s “A” underground line from Ruzyně Airport was originally due to be completed in 2018. However, it may not remain on schedule due to the enormous construction costs in conjunction with the ongoing economic crisis. The cost of the extension: at least CZK 19 billion (EUR 712 million). This could endanger the competitiveness of the airport, which was intended to compete with Vienna Airport in the long term. To travel into the city centre, passengers now have either to take a taxi or a bus before changing to the underground. A direct rail link from the airport to the city centre is designed to increase the attractiveness of the airport and enhance its standing in Central Europe.

Olympic candidature imperilled

The crisis is also threatening to put an end to one of the City of Prague’s special prestigious projects that is particularly important to Mayor Pavel Bém, and that is the city's candidature for the 2020 Summer Olympic Games. Holding the games in Prague would be a boost for tourism in Central Europe, which would also include Vienna. Prague anticipates that a successful candidature would cost CZK 88 billion (EUR 3.3 billion), of which the city would have to contribute CZK 25 billion (EUR 936 million). However, this figure does not include investments in Prague’s infrastructure, which could reach the gigantic figure of CZK 500 billion (EUR 18.7 billion). In view of these tremendous costs, Tomáš Petera, chairman of “Olympic Prague”, the company commissioned with the planning of the candidature, has recommended putting Prague’s Olympic dreams on ice.

Vienna’s interests also affected

On balance Prague’s cost-cutting plans could also have an impact on Vienna’s interests. If the 2020 Summer Olympic Games do not take place in Prague, this would also be a bad thing for tourism in Vienna and Central Europe. Delays in the completion of an effective bypass around Prague will also mean longer journey times between Vienna and Berlin. On the other hand, however, delays in extending the “A” underground line from the centre of Prague to Ruzyně Airport would detract from the airport’s attractiveness compared to Vienna’s Schwechat Airport.