## Czech Republic: Staff Report for the 2015 Article IV Consultation

_IMF Staff Country Reports, July 23, 2015_

## Source details

**Canonical URL:** [Czech Republic: Staff Report for the 2015 Article IV Consultation](https://www.imf.org/en/publications/cr/issues/2016/12/31/czech-republic-staff-report-for-the-2015-article-iv-consultation-43108)

## Other formats

- [Markdown version](/en/publications/cr/issues/2016/12/31/czech-republic-staff-report-for-the-2015-article-iv-consultation-43108/index.md)
- [Structured JSON version](/en/publications/cr/issues/2016/12/31/czech-republic-staff-report-for-the-2015-article-iv-consultation-43108/index.json)
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## Bibliographic details
- Published: July 23, 2015
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513583655.002

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### Summary and Growth Outlook
- The economy is growing strongly on account of improving domestic demand and robust exports.
- Inflation is still well below target despite central bank measures that have helped stem deflationary pressures.
- The financial system is sound and resilient to shocks.
- The challenge for the authorities is to safeguard macroeconomic stability and create conditions for strong and sustainable growth.

### Fiscal Policy Findings and Recommendations
- Findings:
  - Fiscal policy has been supportive of the recovery.
  - The authorities’ medium-term fiscal objective is appropriate, but fiscal framework legislation that would anchor policy is yet to be approved.
- Recommendations:
  - Maintain a supportive fiscal stance this year, but embark on a modest and very gradual fiscal consolidation thereafter, consistent with the medium-term deficit objective.
  - Embed the medium-term deficit objective in a comprehensive framework to enhance its effectiveness in anchoring fiscal policy.
  - Improve budget composition:
    - Higher capital spending to address infrastructure needs.
    - Offset higher capital spending by efficiency gains in current expenditure.
    - Improve revenue administration.

### Monetary Policy Findings and Recommendations
- Findings:
  - The central bank’s use of an exchange rate floor as an additional instrument, in the context of the inflation-targeting framework, has helped stem deflationary pressures.
- Recommendations:
  - Continue to focus on inflation targeting in policymaking and communication.
  - Maintain supportive monetary conditions until deflation risks recede and inflation expectations become entrenched around the inflation target.
  - Consider carefully the timing and mechanics of the eventual normalization of monetary policy.

### Financial Sector Guidance
- Findings:
  - The financial system is sound and resilient to shocks.
- Recommendation:
  - Remain vigilant and be ready to address possible risks to financial stability.

### Structural Reform Priorities
- Remove impediments to higher potential growth, including:
  - Policies to increase labor market participation of certain segments of the population.
  - Enhance investment in human and physical capital.
  - Improve the business climate.

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/czech-republic-staff-report-for-the-2015-article-iv-consultation-43108_