More important, the absence of an effective government precludes efforts aimed at reining in mandatory social welfare spending and thus preventing continued pressure on discretionary spending. Without rationalisation of entitlement programmes, further expenditure cuts would be necessary in areas vital to long-term economic growth—including infrastructure and research and development—to meet the convergence programme’s fiscal targets in 2008 and 2009, when the state budget deficit is projected at Kc95bn and Kc90bn, respectively.

The Economist turns its lens towards the Czech economy and warns that a missed opportunity, by the country itself, the IMF and others, is about to take place.