Czech Republic - Economic Reform

Short-term priorities:

• establishment of short-term economic policy priorities and joint assessment within the framework of the Europe Agreement;
• implementation of policies to maintain both internal and external balance;
• improvement of the framework for corporate governance, in particular by accelerating the restructuring of certain industrial sectors, such as steel and banking;
• implementation of the laws regulating the financial sector (banks and investment companies);
• enforcement of supervision by the new Securities and Exchange Commission.

Assessment (October 1999)

These priorities have been broadly met.

The Czech Government has adopted a medium-term economic policy. External imbalances and inflation have been reduced. Privatisation of the remaining banks with large state participation is progressing well, but the share of classified loans is still high. A policy on industrial restructuring has been adopted, but its implementation has not yet begun. A restructuring plan for the steel industry has yet to be adopted.

The Securities Commission has made an effective start on enforcing existing rules. Its financial independence needs to be assured however, and its regulatory powers strengthened.

Assessment (November 2000)

These priorities have been met in part. Progress has been made on restructuring the banking sector and only one bank remains to be privatised. The volume of bad loans - 26% of gross domestic product (GDP) - is causing concern. The Government has promoted the restructuring and privatisation of enterprises, but little progress has been made on restructuring the steel industry. The Bankruptcy Law has been amended with the aim of accelerating bankruptcy proceedings, but its effective application is still a problem.

Assessment (November 2001)

The restructuring of the banking sector is progressing well, and privatisation has been completed. However, the volume of bad loans remains high. There is still no restructuring plan for the steel sector. As the bankruptcy legislation adopted in 2000 has proved ineffective a new law is currently being drafted.

Assessment (October 2002)

A revised plan for restructuring the steel sector has been drawn up. There has been uneven progress in improving the business environment.

Assessment (November 2003)

Please refer to the fact sheets on the adoption of the Community acquis.

Medium-term priorities:

• promoting the competitiveness of the private sector;
• completing the privatisation of industry and carrying out the programme for liberalising the public services;
• setting up fiscal supervision machinery, including the excessive deficit reporting procedure, the preparation of medium-term fiscal strategies and the improvement of budget transparency;
• ongoing reform of the financing of the healthcare and pension system.

Assessment (November 2000)

Good progress has been made in promoting the competitiveness of the private sector. A number of programmes have been put in place to aid the creation and development of private enterprises, with particular attention to small and medium-sized enterprises (SMEs).

Assessment (November 2001)

Little progress has been made in privatising industry and liberalising public services. Fiscal supervision is satisfactory. The reform on healthcare and pensions is progressing slowly.

Assessment (October 2002)

The privatisation of businesses and liberalisation of public services have made significant progress thanks to the sale of strategic companies and services last year. No major fiscal reform, notably in health and pension systems, has been launched, with the result that public finances deteriorated during the reference period. The priorities of the partnership for accession have been partly met.

Assessment (November 2003)

Please refer to the fact sheets on the adoption of the Community acquis.

Following the signing of the Accession Treaty on 16 April 2003, Cyprus, the Czech Republic, Estonia,Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia acceded to the European Union on 1 May 2004.

REFERENCES

Decision 98/267/EEC of 30 March 1998Official Journal L 121 of 23 April 1998

Decision 99/858/EEC of 6 December 1999Official Journal L 335 of 28 December 1999

Commission Opinion COM(97) 2009 finalNot published in the Official Journal

Commission Report COM(98) 708 finalNot published in the Official Journal

Commission Report COM(1999) 503 finalNot published in the Official Journal

Commission Report COM(2000) 703 finalNot published in the Official Journal

Commission Report COM(2001) 700 final - SEC(2001) 1746Not published in the Official Journal

Commission Report COM(2002) 700 final - SEC(2002) 1402Not published in the Official Journal

Commission Report COM(2003) 675 final - SEC(2003) 1200Not published in the Official Journal

Treaty of Accession to the European Union [Official Journal L 236, 23.09.2003]

Last updated: 19.11.2004