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Czech Republic: Prime Minister Advises Rapid Economic Reform

  • Ron Synovitz

Prague, 25 March 1997 (RFE/RL) -- Czech Prime Minister Vaclav Klaus says that the most imminent economic reform step now facing his government is to foster "mature" capital markets.

Speaking at a forum for international bankers and financial leaders in Prague today, Klaus said he is convinced that the Czech "voucher" privatization program was a successful catalyst for the entire privatization process.

But Klaus admitted that too many investment funds were created during the voucher process and that not all funds have been efficient. He also said he thinks some funds are not "in the right hands." Czech investment funds are companies that gained enormous economic clout by pooling together the privatization coupons of thousands of individuals Czechs.

He said that other former communist countries now attempting to privatize should avoid delays. He said "many productive real and financial assets were lost" during delays in the Czech process.

Klaus said privatization alone isn't the end goal of reforms, but that management must be restructured so that firms are more efficient and competitive. He said other transition countries also must push ahead with liberalizing foreign trade, despite the fact that higher trade imbalances are a logical short-term outcome.

Klaus said he had accepted advice from the International Monetary Fund (IMF) in 1990 with some hesitations. But looking back, he said he now can see that the decision to follow the IMF recommendations was good.