Tuesday May 24, 2022

COMMENT: The hard koruna needs drastic reforms

The Czech koruna set out on a journey last week and broke through the 25 koruna per euro mark. And it’s nothing surprising. Finann registers the markets that there is a strong government in power in the country after many years, its program is the correction of public finances. And a healthy cash register also means a healthy economy.

Only this reaction market sweat only vacation. esk companies will start to know what will happen. If we take into account the prediction that during those years the euro will be worth twenty Czech crowns, it would probably be necessary to do something in corporate strategies and in the economic policy of the government.

Of course, companies can hedge against exchange rate movements with standard tools offered by our banks, but this only reminds them of the short term. In the long run, they have to look for their competitiveness elsewhere than in cheap labor and a suitable exchange rate.

tz montoven does not go long

The Czech Republic will simply be left with those cheap assembly plants, where they are manufactured with low added value. Czech companies must be based on the ability to generate new ideas and innovate production quickly. To provide a range of services and the like for all products. The idea that the introduction of the euro was relatively easy, perhaps definitely took a stand.

The trend of the crown of the crown is inevitable, however difficult the road may be. And it means, among other things, the problem of jobs for low-skilled people, from them it will be much more flexible and willing to adapt to the requirements of the employer.

This is in line with public policy. We must have a colony that will produce qualified, time-educated people, which today certainly cannot be said about Czech colonies without a backlash. It wants such a tax policy that will not significantly increase the cost of employment and will support companies in their own research and development. In short, the crown is becoming stronger to force deep structural reforms.

The unbearable market

Sometimes the greed of a lord is not enough. Now it can be seen, for example, in the field of Czech drivers and fuel carriers. There, the government quite rightly understood that you need to increase productivity, and this is best done with the help of the competition.

Of course, changing the licensing rules, which will allow oil products to be transported in more shape, will mean a reduction in debt for the existing ones. But for the rest of the Czech Republic again reduced fuel prices and cheaper transport. It just was, but the economy will work better.

The debt crisis in the Czech Republic thus relatively quickly reveals various rigidities and disturbances in the functioning of the economy, it was caused by a state of bureaucracy. The International Monetary Fund and the European Union, which lends astronomical resources, of course want these shortcomings to be remedied, because otherwise the competitiveness of Czech companies will not increase. And without this competitiveness, these loans cannot be repaid.

It remains to be seen how long the Czech loan will be met, when their life-funded debt will have to fall dramatically. Today, the South European feels that the thorn economy puts demands on them who are not willing to dream, and that it would probably be better to do the economy somehow differently, without financial crises and fairer. Probably Soviet.

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