Czech ruling party says near coalition deal to end limbo: Pravo

PRAGUE (Reuters) - The Czech ruling ANO party could be days away from agreeing the text of a coalition agreement with the center-left Social Democrats, an ANO official was quoted as saying on Wednesday, raising hopes for an end to months of political instability. The Czech Republic has been without a full-fledged government for half a year as most parties have balked at joining up with ANO while its billionaire businessman leader Andrej Babis fights off fraud allegations. "We should be able to fine-tune the coalition agreement by the end of this week, reflecting demands of the Social Democrats," ANO deputy chairman Jaroslav Faltynek told the daily Pravo newspaper. The Social Democrats have also said they are hoping to reach a deal soon. Any agreement would have to be backed in a referendum of Social Democrat members, possibly later this month. The centrist, populist ANO won elections in October but fell short of a majority in parliament. Its single-party minority cabinet lost a vote of confidence in January as other parties called on Babis to resign over the fraud accusations that he denies. The cabinet has since ruled in caretaker capacity. ANO has been negotiating a new minority cabinet that would include the Social Democrats and be backed in parliament by the Communists. Faltynek was quoted as saying that ANO had convinced the Social Democrats to drop their plans for tax hikes. The Social Democrats have called for a more progressive income tax and for special taxes on banks and utilities. The Social Democrats have also been pushing for a guarantee from Prime Minister Babis that he would quit if he is found guilty in an ongoing investigation into charges of illegally tapping EU subsidizes. He denies the police charges and the case has yet to be brought to trial. The Social Democrats have also demanded that the coalition sacks representatives of the far-right SPD party from positions in the lower house, where they have a deputy speaker and committee heads. The Social Democrats have been concerned that ANO may turn to the SPD for support at times of disagreement in the coalition. (Reporting by Jan Lopatka; Editing by Andrew Heavens)