czech government Archives – Prague Morning

The Czech government is evaluating whether the country is ready to adopt the euro, following an assessment prepared by the National Economic Council of the Government (NERV).

This unpublished analysis, obtained by the Czech media outlet E15, explores the potential benefits, drawbacks, and risks of transitioning to the European currency.

However, economists have not yet endorsed entry into the European Exchange Rate Mechanism (ERM II)—a necessary precursor to adopting the euro. The decision will likely be left to the next administration.

A Strategic Review of Readiness

In February, Prime Minister Petr Fiala’s cabinet reviewed a report from the Ministry of Finance and the Czech National Bank assessing the fulfillment of the Maastricht criteria and the Czech Republic’s economic alignment with the eurozone. Subsequently, NERV was tasked with delivering a detailed analysis tailored to the country’s specific economic conditions.

Economist Mojmír Hampl, a member of NERV and one of the report’s authors, said to E15: “This wasn’t about whether to adopt the euro, but whether we should enter the ‘anteroom’—ERM II. The consensus was that the government must first set a concrete adoption date. You don’t enter the anteroom without intending to step into the living room.”

No Immediate Steps Expected

Despite receiving the analysis earlier this year, the government does not plan to act on its recommendations before the next election cycle.

According to Ministry of Finance spokesperson Petr Habáň, “The current government’s task is to ensure the Czech Republic is as prepared as possible for a serious political debate on euro adoption at the end of its term. The final decision should rest with the government formed after the next elections.”

Finance Minister Zbyněk Stanjura emphasized the priority of stabilizing public finances to create a path toward euro adoption. Although progress has been made, challenges remain.

Meeting the Maastricht Criteria: Progress and Challenges

While the Czech Republic fulfills some Maastricht criteria, others remain unmet. For instance:

Long-term interest rates align with the eurozone’s requirements.
Price stability, however, remains a hurdle. May’s inflation rate of 6.5% exceeded the threshold but is gradually decreasing.

Hampl and Stanjura agree that the Czech Republic is close to meeting these standards.

The primary barrier is the absence of ERM II membership. “Joining ERM II should be part of a credible political strategy, ensuring the transition to the eurozone is as swift as possible,” Habáň stated.

Public Opinion: A Key Challenge

The government must address the significant public skepticism toward the euro. Surveys conducted in early summer reveal that only 20% of Czechs currently support the switch. However, trends indicate gradual growth in public approval.

Economists urge the government to focus on targeted communication, especially with low-income households.

These groups are likely to feel the most immediate impact of euro adoption and often have lower financial literacy, making them more susceptible to misconceptions about the currency change.

Would you like us to write about your business? Find out more

23.00: From Monday, April 27, universities will open for all students.

22.10: The Czech government lifted a ban on its citizens traveling abroad for reasons other than work following an improvement in conditions of the coronavirus outbreak.

21.41: The Czech government will cancel restrictions on free movement as of Friday and allow groups of up to 10 people to meet in public as it scales back measures to fight the spread of the new coronavirus, Health Minister Adam Vojtech said on Thursday

21.12: On Friday, the government will ask the Chamber of Deputies to extend the state of emergency until May 25, Hamáček said to ČTK. The state of emergency, set to expire on April 30, gives the government powers to limit people’s movement or close businesses.

20:50: The government did not announce any changes regarding easing the ban on travel abroad apart from business trips and commuting.

The Czech cabinet on Monday approved an amendment to increase the state budget deficit to 300 billion CZK (11.92 billion U.S. dollars), the Ministry of Finance said in a press release.

It’s the second time the Czech government plans to readjust its state budget this year. In March, President Milos Zeman signed into law a budget expansion up to 200 billion CZK (7.95 billion U.S. dollars).

“The crisis situation persists and there is a further fall in income, which is why this amendment is absolutely necessary to save our economy. We have come up with a number of measures to help both employees, entrepreneurs and businesses,” said Finance Minister Alena Schillerova.

The latest amendment to the Act on the State of Budget for 2020 is based on the updated macroeconomic forecast published by the Ministry of Finance, the ministry said.

The newly proposed budget will contain a total of 1.4282 trillion CZK (56.76 billion U.S. dollars) in revenue and 1.7282 trillion in spending (68.68 billion U.S. dollars), leaving a state budget deficit of 300 billion.

The state now predicts further losses of tax revenue and plans to increase benefits and provide debt relief, the ministry said.

Restrictions in the Czech Republic will be lifted on April 20, with the opening of farmers’ markets, craft shops, and bazaars. Wedding celebrations with fewer than 10 people will also be allowed to take place.

From April 27, shops under 200 square meters in size will also be allowed to open.

The government clarified today that also shops over 200 square meters that are not located in large shopping centers will be allowed to open. They can reduce the sales area with safety tape and reach the required size.

From May 25, the outdoor areas of cafes, pubs, and restaurants will be able to open. Services including barbershops, hairdressers, pedicure and manicure facilities, spas and massage parlors, as well as museums, galleries, and zoos, will also be able open from this date.

Czechs will continue to be required to wear masks for the time being, Health Minister Adam Vojtech said. His deputy, Roman Prymula, added that now “a person with the virus infects less than one person on average” and that the epidemic is in decline, Reuters reported.

The plan will be divided into five stages. The first restrictions will be eased on April 20 with craft shops, farmers’ markets, car showrooms, and second-hand stores to be allowed to open, and more shops and events to be added in stages, according to the ministry.

By June 8, large shopping centers could be fully opened again along with events up to 50 people, said Havlicek.

If the infection is under control, then the plan will be enacted according to schedule. “There may be some shifts there, but we’d like to keep it this way,” he said.

Self-employed workers affected by the pandemic will receive in May a one-time payment of CZK 15,000 from the state, PM Andrej Babiš (ANO) said to Pravo.

“The government is also ready for payments in June if necessary,” he added. For the period from March 12 to April 30, the contribution is CZK 25,000.

The payment is available based on individual applications, in which applicants must prove by way of an affidavit that they meet a number of conditions:

The applicant is self-employed.
The applicant’s self-employed activity is their main activity (except pensioners, primary carers, and those who are receiving disability or parental benefits).

The government previously approved the firest lump sum of CZK 25,000 on April 2.

Up to June 30th, 2020, you can request this allowance in person at your Tax Office, via e-mail and that even without an electronic signature, via a data box or via the tax portal here.

The applicant must enter the bank account number to which the amount is to be sent. The administration accepts applications via data box, by post, and collection boxes placed in front of tax offices.

Czech Republic‘s Finance Minister Alena Schillerová proposed the government acquire CSA Czech Airlines, however noting complications may arise due to a minority foreign ownership in SmartWings Group.

Schillerová expects the Ministry of Industry and Trade to prepare an analysis of strategic companies affected by the coronavirus outbreak.

As previously reported by CAPA, Smartwings Group implemented austerity measures to mitigate the financial impact of the drop in demand.

In 2018, 97.74% of Czech Airlines was bought by the privately-owned Smartwings and CSA became a part of the Smartwings Group. The remaining 2.26% of CSA is owned by insurance company Česká Pojišťovna.

CSA is the fifth oldest still operating airline in the world, after Dutch KLM (1919), Colombian Avianca (1919), Australian Qantas (1920), and Soviet/Russian Aeroflot (1923). It was the first airline in the world to fly regular jet-only routes (between Prague and Moscow).

Join us on Telegram and follow our Insta Stories to read the latest updates on the coronavirus in the Czech Republic.

The Czech government will allow stores and restaurants to reopen gradually over the next two months to reawaken an economy paralyzed by the coronavirus lockdown, officials said on Tuesday (14 April).

Authorities said they would start by letting craft shops reopen on 20 April, larger stores on 11 May, and restaurants and shopping malls on 8 June.

“This scenario is based on a parameter where the coronavirus will be under control, as it has been until now,” Deputy Prime Minister Karel Havlicek told a news conference.

Deputy Health Minister Roman Prymula said the virus reproduction or transmission rate, dubbed “R”, was now less than 1 – meaning a person with the virus typically infects less than 1 person on average, and that the epidemic is in decline.

Nevertheless, Czechs will need to continue wearing face masks until further notice and summer festivals and other events for large groups of people will probably not take place, officials said.

Theatres, other cultural venues for up to 50 people and indoor sections of restaurants would be the last to open on 8 June after beer gardens resume on 25 May under the current plan.

“We managed to get this epidemic under control in some way, the reproduction number has dropped below 1, meaning that the epidemic has a downward trend here,” Prymula said.

The plan also foresees a partial reopening of schools for student admission and graduation exams but normal schooling will not restart before the new academic year in September.

Borders would also remain shut except for travel related to business, medical and family reasons with a 14-day quarantine required on return. Any wider reopening would have to come in coordination with other European countries, officials said.

“Ordinary travel will depend on how the situation develops in Europe, it has to be in concert with other countries,” Havlicek said.

The lockdown has pummelled the Czech economy and cost the services sector an estimated 50 billion crowns (€1.86 billion) in losses through the end of April due to a lack of foreign tourists to Prague and other cities.

Join us on Telegram and follow our Insta Stories to read the latest updates on the coronavirus in the Czech Republic.

The Czech government coalition today agreed to raise all monthly base pays in the public sector by 1500 crowns next year and to cancel the lowest base pay level concerning the least paid professions such as cooks.

The pay decision, which covers about 290,000 state employees, will allow the government to complete its draft budget for next year.

“The last question of the 2020 budget is solved,” said Finance Minister Alena Schillerova on Twitter.

Prime Minister Andrej Babis (ANO) told journalists that teachers will be the only group with a percentage increase, while all the others will get a fixed sum.

The non-teaching staff of schools will have their salaries raised by more than 7 percent since the lowest base level will be cancelled, Babis said.

The government planned a pay rise of 10 percent for teachers and 7 percent for the non-teaching professions.

The Finance Ministry expects economic growth to slow to 2.2% in 2020 from 2.4% this year and it sees downside risks to the outlook.

The Czech economy, like others in central Europe, has held up amid a global slowdown thanks to strong domestic demand fuelled by low unemployment and rising wages.

A Strategic Review of Readiness

No Immediate Steps Expected

Meeting the Maastricht Criteria: Progress and Challenges

Public Opinion: A Key Challenge

Would you like us to write about your business? Find out more

Tell more about your business

Tell us about your.

Tell us about your.

Tell us about your.

Tell us about your.

Tell us about your.

Thank You, It`s All Good

Tell us about your.