Czech Watch - 6 March 2002

Central bank effort to eliminate an excessive strengthening of the currency continues. Jan Frait, CNB board member, warned against too strong exchange rate and repeated a possibility of central bank action. As for interest rates, he claimed that inflationary risks are balanced and current interest rates are adequate. The exchange rate reacted to his words by weakening from 31.52 CZK/EUR to 31.66 CZK/EUR.

Ceska konsolidacni agentura estimates its loss for 2001 at CZK 39.8bn and the loss for 2002 at CZK 70bn. Most of CKA's loss is expected to arise from the transfer of assets from CSOB. So far, CKA has bought black assets worth a nominal CZK 50bn, and it has paid CZK 41bn to CSOB for this assets. The last large block of non-performing debts worth CZK 90bn, so-called "gray" assets, should be transferred from CSOB to CKA by June 19.

CKA plans to sell three large blocks of bad assets worth Kc20 billion each by the end of the year. The claims will consist of CKA's standing assets and of assets taken over from CSOB. Konsolidacni banka, CKA's predecessor, sold the first block of claims with nominal value of CZK 19bn in February 2001 for about 7% of its value.

The government yesterday dismissed Industry and Trade Minister Miroslav Gregr's proposal for managerial privatization of mining companies Severoceske doly and Sokolovska uhelna, which was to take place before the June general elections.

According to the annual report on human rights in the world and individual countries issued by the U.S. State Department, the Czech Republic respects human rights but still has problems with very slow justice, occasional cases of violence and excessive force used by police, mainly against Gypsies. It notes that British Romany activists consider the checks at the airport racial. Regarding freedom of the press, the report recalls that the Czech government prosecuted several journalists for libel and slander.

Click here for the „Czech economic daily“ in .pdf format.

David Marek