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Czech prime minister Bohuslav Sobotka said on Tuesday he would resign along with his government after a dispute with his finance minister and political rival Andrej Babis over the billionaire minister’s past business dealings.

The surprise move could lead to a government reshuffle or a caretaker government taking over until elections scheduled for October – or to an early poll.

It reflects frictions within the country’s three-party governing coalition between Mr Sobotka’s centre-left social democratic party, and the centrist-populist Ano party of Mr Babis, which currently has a double-digit lead in opinion polls.

Analysts had expected the premier might dismiss Mr Babis, but the government resignation came as a surprise. Mr Babis told a Czech news website he did not understand the decision, which destroyed “one of the most successful governments” since the country overthrew communism in 1989.

Mr Sobotka had demanded that the businessman-turned-politician should explain the sources of his wealth and suspicions that he had avoided taxes. Mr Babis has denied any wrongdoing.

“I cannot as prime minister further bear responsibility for a situation where a person whose past is unclear is in the position of finance minister,” Mr Sobotka told a press conference.

He added that the resignation might enable the government to reform without Mr Babis, but that simply firing him would have turned Mr Babis into a martyr.

William Jackson, senior emerging markets economist at Capital Economics, said the move was “unlikely to be a significant impact on the economy or financial markets”.

He said:

The announcement today that the Czech government will resign simply brings forward the political realignment that looked set to happen at October’s parliamentary elections.

Library photo – Andrej Babis (l) and Bohuslav Sobotka (r) – Reuters

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