The document describes how well the Czech Republic is fulfilling, and will fulfil in the coming years, the Maastricht criteria (price stability, public finance sustainability, exchange rate stability and convergence of long-term interest rates) and the degree of alignment of the Czech economy with the euro area.
According to the report, the Czech Republic is very likely to be compliant with the criterion on price stability in 2016, notwithstanding the exceptionally low level of the criterion, reflecting persisting deflation in many EU countries. According to the outlook for inflation, compliance with this criterion is ensured until 2019 with a margin of around 1 pp.
The Czech Republic is also compliant with the criterion on the government financial position. It is likely to remain compliant with it by a sufficient margin (more than 2 pp for the deficit and 20 pp for debt) in the medium term.
The country has long been comfortably compliant with the criterion on the convergence of interest rates and, according to the outlook, is likely to remain so until 2019 (by a margin of at least 2 pp).
The Czech Republic is formally non-compliant with the criterion on participation in the exchange rate mechanism, as it has not joined the mechanism. Assessment of this criterion will only be possible after the Czech Republic joins ERM II and the central rate of the koruna against the euro, against which exchange rate fluctuations would be monitored, has been set.
24th June 2021