The International Monetary Fund (IMF) issued a press release on 20 May 2015 containing a concluding statement after a visit by staff to the Czech Republic for discussions under Article IV of its articles of association.

The economy of the Czech Republic is continuing to recover with broad based growth in domestic demand and growing exports. Output is expected to grow at 3% in 2015 and to stabilize at around 2.25% in the medium term. The Convergence Program aims at fiscal consolidation in the years 2016 to 2018 to reach a structural deficit of 1% of GDP in the medium term. There is scope for higher government spending on infrastructure offset by more efficiency in current spending and revenue administration.

The IMF staff welcomed the government’s efforts to strengthen the tax administration by introducing electronic VAT reporting and electronic cash registers. However they emphasized that the budgeted revenue gains resulting from these improvements to VAT administration should be estimated conservatively to avoid putting pressure on the forecast outcome of its efforts to reduce the deficit.

The IMF considers that growth is restricted by demographic factors, structural weaknesses in the labor market and a slow rate of productivity improvement. Labor skills need to be upgraded and skills mismatches in the market must be reduced. This could be done by strengthening education, training and apprenticeship programs.

The IMF recommended that the business climate could be improved by simplifying tax compliance and other administrative procedures. Also practical measures such as improvements to the transport infrastructure and strengthened research and development would support faster growth and allow firms to move up the value chain.