The European Commission yesterday officially published its annual report assessing the progress of individual candidate countries. The Czech Republic got a better assessment than it did last year, when the commission was very critical. On the other hand, Czech officials were disappointed that the CR was this year ranked below Cyprus, Malta, Poland, Hungary and Estonia in terms of economic progress. The report met with very little response on the Czech financial markets.
On the positive side, the EC report said “the CR is prepared to cope with competitive pressures in the EU in the short term,“ much better language regarding the general shape of the economy than last year. The report also notes the strong export performance in the CR, capital inflows, the recent economic recovery, better integration with the EU economy, privatization, etc.
On the negative side, the report highlights structural reforms that are overdue—e.g., public administration reform and a reform of the slow judicial system—and is critical of specific pieces of legislation (such as the proposed amendment to the central bank law) and of the slow implementation of other key economic legislation (e.g., the bankruptcy law). The report also expressed concern with the level of bad debt in the economy, and is particularly critical of the deteriorating public finance situation.
Separately, the EC said that negotiations with the most advanced countries could be completed in 2002, which we find encouraging. The EC did not set a fixed date for the entry of the front-runners, however.