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EBRD's new strategy to improve Czech business climate
With 80 per cent of economic activity in private hands, a large degree of price liberalisation, an open foreign trade regime and no major constraints to foreign investments, the Czech Republic has made considerable progress in transition. Yet, as the European Bank for Reconstruction and Development (EBRD), finds in its latest strategy for the country, now available on www.ebrd.com, there still remains a need for further reforms and improvements. In its analysis the Bank identifies an improvement of the business climate as the key challenge for the country.
Apart from political and economic conditions also the legal framework is of the utmost importance for attracting investment and enabling sustainable growth. Strict law enforcement, unbiased granting of licences and permits as well as increased transparency in awarding public contracts at all levels and in the privatisation process are essential. Furthermore, the EBRD calls on the Czech authorities to maintain fiscal stability, finalise the privatisation of remaining state-owned companies such as Czech Telecom, Unipetrol and CEZ, and pay more attention to local small and medium-sized enterprises.
As the Czech Republic is about to join the European Union in May 2004 the EBRD’s activities will be focused on the following:
• In the financial sector the Bank will work closely with local banks and business partners to develop the range of financial products which are not currently well supplied to the economy such as equity, mezzanine funding and a broader range of SME finance. The Bank will also support further the development of non-banking financial institutions (leasing companies, pension funds, asset management companies).
• In the enterprise sector the EBRD will support the privatisation of the remaining state-owned assets and actively support the restructuring, consolidation, and possibly, regional expansion of the local private sector. The Bank will also support foreign direct investment; particularly in regions with higher unemployment.
• In infrastructure and environment the Bank will promote the introduction of schemes that do not rely on a sovereign guarantee and will seek to participate in projects using EU Cohesion and Structural Funds. The Bank will support railways restructuring and explore opportunities for the use of public private funding structures in the road sector.
The EBRD has invested €873 million in 42 direct and 32 regional projects in the Czech Republic, mobilising a further €3 billion from business partners. The Bank’s current portfolio stands at €530 million, with the majority related to financial institutions. This reflects the EBRD’s significant role in the privatisation of the Czech banking sector and its support for SMEs through credit lines.
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