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Czech Finance Minister Andrej Babis attends a parliamentary session in Prague, Czech Republic, May 10, 2017. REUTERS/David W Cerny


PRAGUE (Reuters) - Czech Finance Minister Andrej Babis proposed a former Microsoft executive as his replacement on Wednesday, offering a way out of a political battle that has rattled the centre-left government months before an election.

Babis said he hoped Prime Minister Bohuslav Sobotka would appoint Ivan Pilny, currently head of the economic affairs committee in the lower house of parliament, which would end a row between his ANO party and Sobotka's Social Democrats.

Sobotka has demanded Babis leave the cabinet due to questions over his past tax operations. Babis has denied any wrongdoing and had refused to leave, but has come to accept his dismissal if his party chooses his successor.

Pilny, 72 and a member of ANO, is a former head of Microsoft's Czech operations.

"I think Ivan Pilny will be a good minister," Babis told reporters. "Mainly we want to end this episode. It is not understandable for me because we could have entered history as the most successful government."

The row has shaken the three-party coalition government, which came to power in 2014 and was seen the most stable of any cabinet in the last 15 years. Its time in power has been marked by solid economic growth and record low unemployment that helped it balance the budget for the first time in two decades.

With an election scheduled for October, Babis has called the scandal a political ploy by Sobotka, whose Social Democrats trail ANO in popularity by a wide margin.

Sobotka said on Twitter he would meet Pilny on Wednesday afternoon and announce his decision afterwards. He rejected ANO's earlier nomination of Deputy Minister Alena Schillerova on Monday, saying she was too close to Babis.

He has raised questions about whether Babis may have broken the law in previous years by buying tax-exempt bonds from what was then his company, Agrofert, the country's largest private employer active in agriculture, food, chemicals and media.

Sobotka has said any new minister must be independent enough from Babis to allow for an impartial probe of the tax issue.

President Milos Zeman has to approve the replacement of a cabinet minister. He has so far refused Sobotka's request to dismiss Babis, asking the prime minister, among other things, to first nominate a replacement.

(Reporting by Petra Vodstrcilova; Writing by Jan Lopatka; Editing by Tom Heneghan)

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