Reports on Observance of Standards and Codes Czech Republic and the IMF Czech Republic ROSC I.  Update II.  Overview III.  Data Dissemination IV.  Fiscal Transparency V.  Transparency of Monetary and Financial Policies VI.  Banking Supervision VII.  Securities Market SURVEY What do you think of Reports on the Observance of Standards and Codes?

REPORT ON THE OBSERVANCE OF STANDARDS AND CODES (ROSC) Czech Republic   Queries/Comments      should be directed to:    Director    European I Department    700 19th Street, NW    Washington, DC 20431    202-623-7000    http://www.imf.org    scu-comment@imf.org III.  Data Dissemination   Prepared by staff from the International Monetary Fund on the basis of information provided by the Czech authorities Prepared in August 1999 and reissued in July 2000 Data Dissemination1 1. The Czech Republic subscribes to the Fund’s Special Data Dissemination Standard (see Box 1). Different agencies are responsible for compiling and disseminating the various sectoral data that are available on the macroeconomy. These responsibilities, along with the relevant legislation that governs the data-related work, are summarized in Appendix I.

A. Description of Practice 2. Since its subscription to the SDDS was acknowledged in May 1998, the Czech Republic has moved decisively to improve data dissemination. The authorities have announced a total of 12 transition plans outlining the steps to be taken to come into observance of the SDDS for five data categories (general government operations, central government operations, central government debt, the analytical accounts of the banking sector, and the analytical accounts of the central bank). In addition, there have been 15 transition plans for the dissemination of advance release calendars that meet the SDDS requirements. All of the Czech Republic’s transition plans were completed by the end of May 1999. The Czech Republic is not taking any permanent flexibility options or "as relevant" options for the periodicity and timeliness of the data, or any calendar flexibilities for the dissemination of advance release calendars (Appendix II describes the flexibility options under the SDDS). 3. Although the Czech Republic has not yet established a National Summary Data Page (NSDP), intensive preparatory work has been done with the aim of completing the NSDP in the fourth quarter of 1999 and meeting the end-1999 deadline. This page would present all the actual data described on the Dissemination Standards Bulletin Board (DSBB) in one Internet website and could be hyperlinked to the DSBB.2 B. IMF Staff Commentary Coverage, Frequency, and Timeliness. On the basis of the information provided by the authorities and reviewed by the staff, the Czech Republic meets the specifications of the SDDS for the coverage, periodicity, and timeliness of data, and for advance release calendars (Appendix III contains copies of the Summary of Observance and Advance Release Calendar pages). The Czech Republic is the third subscriber so far to reach this stage. Once the NSDP is set up, observance of the SDDS can be monitored continuously. On the basis of the data published as press releases and/or on the relevant websites of the Czech Statistical Office (CSO), the Ministry of Labor and Social Affairs (MLSA), the MOF, and the CNB, it appears Box 1. The Special Data Dissemination Standard The SDDS was established in April 1996 to guide Fund members that have, or that might seek, access to international capital markets in the provision of their economic and financial data to the public. The objectives of the SDDS are to enhance the availability of timely and comprehensive statistics and, therefore, contribute to the pursuit of sound macroeconomic policies and improved functioning of financial markets. The SDDS is a "best practice" standard against which a country’s dissemination practices can be measured. It covers four sectors of the economy (real, fiscal, financial, and external), as well as population, and has four dimensions: the data dimension (the coverage, periodicity, and timeliness of the data); access by the public to those data; the integrity of the data; and the quality of the data. Countries that subscribe to the SDDS are required to provide descriptions of their data dissemination practices (metadata) for posting on the IMF’s Dissemination Standards Bulletin Board (DSBB). Subscribers are also required to maintain an Internet website, referred to as a national summary data page (NSDP), which contains the actual data, and to which the DSBB is electronically linked. A NSDP is to be in place for each subscriber by the end of 1999. The DSBB metadata also provides information on subscribers’ practices for the following aspects of transparency: simultaneous release of the data; laws governing the compilation and release of the data; access to the data by other government officials prior to release; ministerial commentary accompanying the release of the data; revision policy; and advance notice of major changes in methodology. Countries that subscribe to the SDDS undertake to be in full observance of the Standard by the implementation deadlines which come into effect during 1999 and early 2000 (see the DSBB for a schedule of implementation deadlines). For practical purposes, continuous staff monitoring of observance of the SDDS is limited to the coverage, periodicity and timeliness of the data and to the dissemination of advance release calendars. The SDDS was designed to assist users in making their own assessment of data quality by providing information on the DSBB on the dissemination of documentation of methodology and the publication of more detailed data which provide an assurance of the reasonableness of the data. In addition, Summary Methodologies designed to shed light on data quality, and using a standard format for all countries for each data category, are expected to be disseminated on the DSBB by the end of 1999. that data that are consistent with the DSBB metadata are being disseminated for the prescribed SDDS data categories.3 Data are released on a timely basis. Discussions with users of Czech economic statistics, including news services, confirm that the advance release calendars are strictly adhered to. Access by the Public. The advance release calendars ensure proper access to the data by the public by allowing for simultaneous release to all parties. Generally, this is done through faxed press releases to the major news agencies under 15—30 minute embargo. News agencies report that this is working well. Integrity. Currently, neither the data compiled by the CSO, the CNB, the MOF, nor the MLSA are provided to government officials before their public release. Some data releases (by the CSO and the MLSA) are accompanied by commentary; the monetary data released by the CNB are issued without commentary. Commentary could usefully be provided to explain special factors: there have been instances where this has not been the case, leading to some confusion among users. Quality.4 The availability of summary methodology statements on the DSBB is designed to facilitate users’ ability to assess the quality of data disseminated by the Czech Republic. To date, summary methodology statements have been provided to the Fund for all data categories. After review by Fund staff and related follow-up with the authorities, statements for the production index, and the consumer and producer price indices, as well as for merchandise trade data have been posted on the DSBB. The remaining statements will be posted in due course. Reflecting the views of data users, there would appear to be room for improvement in the quality of the data that is being disseminated for selected data categories. For example, with respect to the national accounts,5 quarterly estimates are derived from the quarterly reports of enterprises and from various surveys. The estimates are subject to bias because of accounting rules (annual reporting of bookkeeping accounts is mandatory for enterprises, but quarterly reporting is not) and the lumping of several expenditure categories in particular quarters when spending may have occurred during other time periods. It is, however, noteworthy that the CSO published in June 1999 revised national accounts covering the period 1994—98 and including GDP by sector of origin rebased to 1995 prices. Data for the period 1990—93 should be made available in the near future. The authorities are in the process of implementing the European System of Accounts (ESA) 95. On external trade and the current account, revisions in recent years to procedures for processing export data have brought external trade statistics close to the practice of the EU. However, there continue to be some discrepancies in the current account data published by the central bank and the statistical office. Progress has been made towards implementing the methodology in the Fund’s Balance of Payment Manual, 5th Edition. 1 Prepared by Mr. Di Calogero and Ms. Montanjees (both Statistics Department), in consultation with the Czech authorities and the European I Department. 2 The website for the DSBB is http://dsbb.imf.org. 3 The website for the CSO is http://www.czso.cz; http://www.mpsv.cz for the MLSA; http://www.mfcr.cz for the MOF; and http://www.cnb.cz for the CNB. 4 The SDDS states that: "A set of standards that deals with the coverage, periodicity, and timeliness of the data must also address the quality of statistics. Although quality is difficult to judge, monitorable proxies, designed to focus on information the user needs to judge quality, can be useful." The SDDS, therefore, does not attempt to measure or assess data quality, but tries to ensure that data users are provided with sufficient information to form their own assessments, including by providing summary methodology statements. 5 In addition to information provided to Fund staff, the comments on the national accounts draw on "National Accounts of Central and Eastern Europe," OECD, 1997. APPENDIX I The Institutional Framework for Data Compilation in the Czech Republic 1. The CSO is the Czech Republic’s official statistical agency, and is responsible for compiling and disseminating all the data on the real sector data, employment, population, and merchandise trade, but not unemployment. 2. The CSO operates under the terms of the State Statistical Service Act No. 89/1995, which defines the independence of the CSO and its rights and duties towards the reporting units, including the confidentiality of individual data. The Act also specifies the method of imposing reporting duty on businesses and rules out the imposition of reporting duty on the members of the population. Under the terms of the Act, surveys involving the population may only be performed voluntarily unless the reporting duty is laid down in a special law, such as for the population census due to be conducted in 2001. 3. Contributing to the independence of the CSO is the fact that the CSO President is appointed by the President of the Czech Republic (on the basis of a proposal made by the Prime Minister) and that its budget is approved by the Parliament of the Czech Republic. Although not a member of Cabinet, the CSO President may attend Cabinet meetings. 4. There is no legal requirement for the CSO to publish its data, and the agency does so as a service to the public, on the basis of an internal directive of the CSO President. 5. The MLSA is the agency responsible for compiling and disseminating the data on registered unemployment. In compiling the data, the MLSA is governed by the terms of Act No. 1/1991, and the Employment Act No. 9/1991. These acts specify the definition of a registered unemployed person and the categories of citizens considered to be jeopardized ("at risk") in the labor market. Dissemination of the data is governed by the terms of State Statistical Service Act (referenced above). 6. There is no legal requirement for the MLSA to publish the unemployment data, which is done as a service to the public. 7. The MOF is the agency responsible for compiling and disseminating the data for the fiscal sector. The compilation of the data is governed by a variety of acts. (a) The data concerning the central government are compiled according to the State Budget Act (576/1990) and approved every year by the Czech Parliament. Act 576/1990 defines the obligation of the Czech Parliament to receive the State budget data on a quarterly basis, but there is no act requiring the MOF to compile and publish central government budgetary data; the data are published by the MOF as a service to the public. (b) The data on the extrabudgetary funds of the central government are governed by the following laws: Acts 239/1992, 241/1992, 388/1991, 77/1969, and the State Budget Act, in the case of the State Funds; by Act 171/1991, in the case of the National Property Fund; and by Act 569/1991 in the case of the Czech Land Fund. (c) The data on the health insurance organizations are governed by Acts 48/1997, 592/1992, 280/1992, and 551/1991, and subsequent regulations and supplementary declarations. (d) The data on local governments are governed by both the State Budget Act and the Law on Municipalities (Act 367/1990). 8. There is no law concerning the compilation and dissemination of data on central government debt. These data are disseminated by the MOF as a service to the public. 9. The CNB is responsible for compiling and publishing the data on the financial sector and the external sector, with the exception of merchandise trade. The compilation of the data are governed by the terms of the Act on the Czech National Bank (Act 6/1993), which specifies that commercial banks are obliged to provide information to the CNB and that the CNB is obliged to publish aggregate information on monetary developments for the general public, as well as data on international reserves and exchange rates. The CNB is also governed by the terms of the Law on Protection of Personal Data in Information Technology Systems (Act 256/1992), which provides for the protection of the confidentiality of individual data. 10. With the exception of the data on monetary aggregates, international reserves, and exchange rates, there is no law requiring the publication of the financial and external sector data; these data are published by the CNB as a service to the public. 11. Copies of the Acts governing the CSO, MLSA, MOF, and CNB are published in Czech in the Collection of Laws of the Czech Republic which is available in public libraries and, under the terms of the Act on the Collection of Laws, at the offices of all local authorities. The Act on the Czech National Bank is also published in the General Information section of the CNB Internet website in both Czech and English. APPENDIX II Flexibility and "As Relevant" Options Under the DSBB 1. A "flexibility option" allows a subscriber to disseminate data with a lower frequency (the periodicity element) or with a greater lag (the timeliness element), or both, than prescribed for the data category under the SDDS. The SDDS allows all subscribers two flexibility options on an ongoing basis. Also, the Executive Board of the IMF has agreed to provide subscribers with an additional temporary flexibility option to smooth the transition to observance of the SDDS. This temporary option expires at the end of 1999. There are some restrictions on the use of flexibility options. No flexibility is available with respect to international reserves. In addition, flexibility may only be taken with respect to the timeliness, but not the periodicity, of data on the national accounts and the balance of payments, and only if the other data categories under the SDDS that are indicated as tracking developments in these areas are disseminated with the prescribed periodicity and timeliness. For national accounts, the tracking category is the production index, and the tracking categories for the balance of payments are merchandise trade and international reserves. 2. "Calendar flexibilities," which can be taken for a maximum of two data categories, exempt the subscriber from having to publish the precise release date for those data categories. Nevertheless, the one quarter-ahead approximate release dates must still be disseminated. 3. Finally, "as relevant" options are available for certain data categories because of structural or institutional factors; these options reflect that certain data categories may not be relevant to the economy of a given country, or it may not be possible to disseminate data with the prescribed periodicity and/or timeliness. APPENDIX III Dissemination Standards Bulletin Board AS PROVIDED BY CZECH REPUBLIC AS A SUBSCRIBER TO THE SDDS Last update: 04/13/1999 Czech Republic Summary Page on Observance and Transition Plan Contact person: Jaroslav Kubsa Czech National Bank (CNB) , Na Prikope 28, Praha, Czech Republic Phone: 420 2 24413050   Fax: 420 2 24412147 Internet e-mail: jaroslav.kubsa@cnb.cz Check marks (x) indicate that the specifications of the SDDS for data coverage, periodicity, and timeliness are met. Where Czech Republic has made use of the SDDS’s flexibility on these elements or presented plans to meet the specifications during the transition period, the table shows Czech Republic’s present practice and a footnote that indicates the use of the flexibility or the transition plan. Category (and, if different, national descriptor) Coverage Periodicity Timeliness Real sector National accounts x x X Production index x x X Labor market: Employment x x X Labor market: Unemployment x x X Labor market: Wages/Earnings x x X Price indices: Consumer prices x x X Price indices: Producer prices x x X Fiscal sector General government or public sector operations x x X Central government operations x x X Central government debt x x X Financial sector Analytical accounts of the banking sector x x X Analytical accounts of the central bank x x X Interest rates x x ... Stock market: Share price index x x ... External sector Balance of payments x x X International reserves x x X Merchandise trade x x X International investment position x x X Exchange rates x x ... Population x x ... AS PROVIDED BY CZECH REPUBLIC AS A SUBSCRIBER TO THE SDDS Last update: 08/01/1999 Czech Republic Advance Release Calendar Contact person: Jaroslav Kubsa Czech National Bank (CNB), Na Prikope 28, Praha, Czech Republic Phone: 420 2 24413050   Fax: 420 2 24412147 Internet e-mail: jaroslav.kubsa@cnb.cz   Data Category (and, if different, national descriptor) Date of last calendar release (mm/dd/yy) Calendar flexi- bility Notes Release* Aug. Sep. Oct. Nov. Real sector National accounts 01/01/99     14 (Q2 99) Production index 01/01/99     9 (06 99) 8 (07 99) 11 (08 99) 9 (09 99) Labor market: Employment 01/01/99   1/ 9, 30 (06 99), (Q2 99) 8 (07 99) 11 (08 99) 9, 29 (09 99), (Q3 99) Labor market: Unemployment 01/01/99     9 (07 99) 8 (08 99) 8 (09 99) 8 (10 99) Labor market: Wages/Earnings 01/01/99   2/ 9, 30 (06 99, Q2 99) 8 (07 99) 11 (08 99) 9, 29 (09 99, Q3 99) Price indices: Consumer prices 10/01/98     9 (07 99) 8 (08 99) 8 (09 99) 8 (10 99) Price indices: Producer prices 10/01/98     12 (07 99) 13 (08 99) 13 (09 99) 11 (10 99) Fiscal sector General government or public sector operations 10/15/98     Central government operations 10/15/98     27 (07 99) 28 (08 99) 27 (09 99) 26 (10 99) Central government debt 10/13/98     17 (Q2 99) Financial sector Analytical accounts of the banking sector 01/01/99     31 (07 99) 30 (08 99) 30 (09 99) 30 (10 99) Analytical accounts of the central bank       16 (07 99) 15 (08 99) 15 (09 99) 15 (10 99) Interest rates     3/ Stock market: Share price index     3/ External sector Balance of payments 01/01/99     3 (Q2 99) International reserves 01/01/99     9 (07 99) 7 (08 99) 7 (09 99) 8 (10 99) Merchandise trade 01/01/99     20 (07 99) 21 (08 99) 21 (09 99) 19 (10 99) International investment position       28 (Q2 99) Exchange rates 10/01/98   3/ Population 01/01/99     1 (Q2 99) *Release dates can be specified as a specific date, a range of dates, or a no-later-than (NLT) date. The period (or date) to which data to be released relate is shown in parentheses. 1/ Quarterly release dates refer to the Labor Market: Employment data. Monthly release dates refer to the Labor Market: Employment in Industry data. 2/ Quarterly release dates refer to the Labor Market: Wages/Earnings data. Monthly release dates refer to the Labor Market: Average Monthly Earnings in Industry data. 3/ Not applicable. Daily data are disseminated daily. All dates are expected dates of release and are subject to change.