Journal Issue
Share
Article

Czech Republic: Staff Report for the 2015 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund. European Dept.
Published Date:
July 2015
Share
  • ShareShare
Show Summary Details

Fund Relations

(As of June 10, 2015; unless specified otherwise)

Membership Status: Joined 01/01/1993; Article VIII

General Resources Account

SDR MillionPercent of Quota
Quota1,002.20100.0
Fund Holdings of Currency651.8565.04
Reserve position in Fund350.3534.96
Lending to the Fund
Borrowing Agreement27.70

SDR Department:

SDR MillionPercent Allocation
Net Cumulative Allocation780.20100.0
Holdings751.6196.34

Outstanding Purchases and Loans: None

Financial Arrangements:

Amount ApprovalAmount ExpirationApprovedDrawn
TypeDateDate(SDR Million)(SDR Million)
Stand-by3/17/19933/16/1994177.0070.00

Projected Payments to Fund:

(SDR Million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20152016201720182019
Principal
Charges/Interest0.010.030.030.030.03
Total0.010.030.030.030.03

Exchange Rate Arrangement:

The currency of the Czech Republic is the Czech koruna, created on February 8, 1993 upon the dissolution of the currency union with the Slovak Republic, which had used the Czechoslovak koruna as its currency. From May 3, 1993 to May 27, 1997, the exchange rate was pegged to a basket of two currencies: the deutsche mark (65 percent) and the U.S. dollar (35 percent). On February 28, 1996, the Czech National Bank (CNB) widened the exchange rate band from ±0.5 percent to ±7.5 percent around the central rate. On May 27, 1997, managed floating was introduced. Between 2002 and 2013, the CNB had not engaged in direct interventions in the foreign exchange market, and the de facto exchange rate regime was classified as a free float. In November 2013, facing the zero lower bound for policy rates and a persistent and large undershooting of its inflation target, the CNB intervened in the market to weaken the currency, and announced its commitment to resist any appreciation beyond CZK 27 per euro. Since then, the koruna traded between CZK 27.0 and CZK 28.33 per euro. The de facto exchange rate arrangement was retroactively reclassified from other managed to a stabilized arrangement, effective November 19, 2013. The de jure exchange rate arrangement remains floating. On June 10, 2015, the exchange rate stood at CZK 27.27 per euro and CZK 24.10 per U.S. dollar.

The Czech Republic has accepted the obligations of Article VIII and maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions. The Czech Republic maintains exchange restrictions for security reasons, based on UN Security Council Resolutions and Council of the European Union Regulations that have been notified to the Fund for approval under the procedures set forth in Executive Board Decision No. 144-(52/51).

Last Article IV Consultation:

The last Article IV consultation with the Czech Republic was concluded on August 27, 2014. The staff report and the press release were published on September 2, 2014.

FSAP Participation and ROSCs:

An FSAP was carried out in late 2000/ early 2001. The Financial System Stability Assessment was considered by the Executive Board on July 16, 2001, concurrently with the staff report for the 2001 Article IV Consultation. An FSAP update was carried out in 2011. ROSCs on: banking supervision; data dissemination; fiscal transparency; securities market; and transparency of monetary and financial policies were published on the Fund’s external website on July 1, 2000.

Technical Assistance: See attached table.

Implementation of HIPC Initiative: Not Applicable.

Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable.

Implementation of Post-Catastrophic Debt Relief (PCDR): Not Applicable.

Safeguards Assessments: Not Applicable.

Czech Republic: Technical Assistance, 1991–2015
DepartmentTimingPurpose
FADDecember 1991–September 1993Regular visits by FAD consultant on VAT administration
March 1993Public financial management
September 1993Follow-up visit on public financial management
November 1993Follow-up visit on public financial management
January 1994Follow-up visit on public financial management
July 1994Follow-up visit by FAD consultant on VAT administration
May 1995Follow-up visit on public financial management
June 1995Follow-up visit by FAD consultant on VAT administration
June–July 1999Medium-term fiscal framework
MCMFebruary 1992Monetary management and research, foreign exchange operations, and banking supervision
June 1992Monetary research
July 1992Long-term resident expert assignment in the area of banking supervision (financed by EC-PHARE; supervised by the Fund)
December 1992 andBond issuance and monetary management
February 1993Follow-up visit on bond issuance and monetary
November 1993management and management of cash balances Data management and monetary research
April 1994Foreign exchange laws (jointly with LEG) and external
January 1995liberalization
May 1995Monetary operations
May 1995Banking system reform
May 1996Economic research
April 1997Banking legislation
February–June 1999Monetary research–inflation targeting
June 1999Integrated financial sector supervision (with WB)
RESSeptember 1999Inflation targeting (financed by MFD)
June–August 2000Inflation targeting (financed by MFD)
February–March 2005Inflation targeting (financed by MFD)
STAMay 1993Money and banking statistics
February 1994Balance of payments
April 1994Government finance
November 1994Money and banking statistics
January–February 1999Money and banking statistics
May 2002Monetary and financial statistics
February 2003Implementing GFSM 2001
November 2006GFSM 2001 Pilot Project

GFSM 2001 implementation

Statistical Issues

I. Assessment of Data Adequacy for Surveillance
General:
• Data provision is adequate for surveillance.
National Accounts:
• National accounts data are subject to certain weaknesses. Value added in the small scale private sector is likely to be underestimated, as the mechanisms for data collection on this sector are not yet fully developed and a significant proportion of unrecorded activity stems from tax evasion. Discrepancies between GDP estimates based on the production method and the expenditure method are large and are subsumed under change in stocks. Quarterly estimates of national accounts are derived from quarterly reports of enterprises and surveys. The estimates are subject to bias because of nonresponse (while annual reporting of bookkeeping accounts is mandatory for enterprises, quarterly reporting is not) and lumping of several expenditure categories in particular quarters by respondents. The Czech Republic adopted the European System of Accounts 2010 (ESA 2010) in September 2014. The transition from the ESA 1995 (ESA95) required the revision of national accounts data.
Price Statistics:
• The Czech Statistical Office (CSO) compiles and disseminates a monthly consumer price index (CPI) using a weighting structure based on expenditure data collected during 2012. Weights are updated biannually. A monthly Harmonized Index of Consumer Prices (HICP) is disseminated according to European regulations. The producer price index is released monthly with coverage including manufacturing, construction, agriculture, and select business services (business to business only). The CSO also compiles and releases monthly import and export price indexes based on data collected directly from establishments engaged in export and/or import activities.
Government Finance Statistics:
• Annual and quarterly fiscal data are compiled on ESA2010 basis by the Czech Statistical Office, including non-financial accounts, financial accounts, and financial balance sheets. The Ministry of Finance uses the ESA methodology for the Convergence Program targets. The ESA 2010 methodology includes a wider coverage of the general government sector, different classification of some government transactions, and impacts the calculation of GDP. Government transactions are recorded on an accrual basis.
Monetary and Financial Statistics:
• Monetary survey data provided to the European Department are generally adequate for policy purposes. However, large variations in the interbank clearing account float, especially at the end of the year, require caution in interpreting monetary developments. The data published in the International Financial Statistics (IFS) are based on monetary accounts derived from the ECB’s framework. The same set of accounts also forms the basis for monetary statistics published in the CNB’s bulletins and on the website, which are thereby effectively harmonized with the monetary statistics published in IFS, although the presentation in IFS differs somewhat from the CNB’s.
Financial sector surveillance:
• CNB is reporting Financial Soundness Indicators for Deposit Takers on a quarterly basis.
External sector statistics:
• Starting in 2014, external sector statistics are compiled according to the Balance of Payments and International Investment Position Manual, sixth edition (BPM6) and in accordance with legal requirements of the ECB and Eurostat. Balance of payments financial account transactions are generally derived from changes in stock data adjusted by exchange rate, price, and other changes; they are not directly based on the value of current transactions. Quarterly external debt statistics are reported to the Quarterly External Debt Statistics (QEDS) database.
II. Data Standards and Quality
Subscriber to the Fund’s Special Data Dissemination Standard since April 1998.Data ROSC was published on July 1, 2000.
Table of Common Indicators Required for Surveillance(As of June 10, 2015)
Date of Latest

Observation
Date

Received
Frequency

of Data7
Frequency of

Reporting7
Frequency of

Publication7
Exchange RatescurrentcurrentDDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1May 2015Jun. 2015DMM
Reserve/Base MoneyApr. 2015May 2015MMM
Broad MoneyApr. 2015May 2015MMM
Central Bank Balance SheetApr. 2015May 2015MMM
Consolidated Balance Sheet of the Banking SystemApr. 2015May 2015MMM
Interest Rates2currentcurrentDDD
Consumer Price IndexMay 2015Jun. 2015MMM
Revenue, Expenditure, Balance and Composition of Financing3 – General Government42014 Q4Jun. 2015QQQ
Revenue, Expenditure, Balance and Composition of Financing3 – Central GovernmentMay 2015Jun. 2015MMM
Stocks of Central Government and Central Government-Guaranteed Debt52014 Q4May 2015QQQ
External Current Account BalanceMar. 2015May 2015MMM
Exports and Imports of Goods and ServicesMar. 2015May 2015MMM
GDP/GNP2015 Q1May 2015QQQ
Gross External Debt2014 Q4Mar. 2015QQQ
International Investment Position62014 Q4Mar. 2015QQQ

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments. Data for the state budget are available with monthly frequency and timeliness, while data on extra budgetary funds are available only on an annual basis.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments. Data for the state budget are available with monthly frequency and timeliness, while data on extra budgetary funds are available only on an annual basis.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D); Weekly (W); Monthly (M); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Other Resources Citing This Publication