Commission Report (2002): Czech Republic

2.4. General evaluation

The 1997 Opinion already acknowledged the substantial reform efforts undertaken by the Czech authorities to transform their economy. Since the Opinion, and against a challenging international economic environment, economic performance has improved. Macroeconomic stability has been achieved, reforms have deepened while the Czech authorities` commitment to the economic requirements of EU accession has been sustained.

Hence, it is concluded that the Czech Republic is a functioning market economy. The continuation of its current reform path should enable the Czech Republic to cope with competitive pressure and market forces within the Union.

Improvements can be made as regards the management of public finance, in particular by addressing the high and rising mandatory and quasi-mandatory government expenditures. Reforms of social expenditure, such as pension and health care schemes, must be pursued. Furthermore, a more decisive approach towards selling off bad assets of the Czech Consolidation Agency to private investors would free the economy of misallocated resources.