Zeman said Bohuslav Sobotka will be sworn in Jan 17, but added he wouldn't appoint Sobotka's government until Parliament at least initially approves a law on public servants that the Czech Republic has previously lacked.
"That's my condition," Zeman said.
Parliament is expected to discuss the law Jan. 21 and Zeman said the government might be in place by the end of January.
Its formation will end a political crisis triggered by the previous government's spectacular collapse in a whirlwind of corruption allegations and marital infidelity in June.
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Babis campaigned on an anti-corruption ticket and attracted a surprisingly high number of voters who were disgusted by corruption scandals and didn't care about reports denied by Babis that he collaborated with the communist-era secret police.
He is proposed to be the new finance minister.
According to some legal views shared by Zeman but denied by Babis Babis' past currently makes it impossible for him to take over the minister's post.
The Slovak born Babis has been trying to clear his name and is currently suing Slovakia's Institute of the Nation's Memory that has parts of his secret-police file.
Zeman also expressed reservations about some other proposed ministers but didn't say he would refuse to appoint them.
According the Czech Constitution, the president appoints the government at the prime minister's request.