SPECIAL REPORT - CZECHOSLOVAKIA BEINGS IMPLEMENTATION OF NEW ECONOMIC PROGRAM

Created: 1/24/1966

OCR scan of the original document, errors are possible

SPECIAL REPORT

limifati

ifl EASED TO FOREIGN with specific disseminationthe provisions ofocumenr rmtfBBT handled within thef losed.

CZECHOSLOVAKIA BEGINS IMPLEMENTATION OP NEK ECONOMIC PROGRAM

Czechoslovakia's new economic program was first, outlined two years ago to deal with grave economic shortcomings. It has become clear, however, thatear of experimentation, the party hasto retain Important aspects of central control, which could jeopardize soaie of the nore liberalof the reforms. Although the party has announced that many of the reforms were effective as as scheduled, both the recently published party theses and the plan6 Indicate that the actual nature and extent of the reform, program will depend to some degree on economic and to what extent earlier economicare corrected. Soma aspects of the program as outlined in the party theses are to be discussed at nationwide meetings in preparation for the party congress ln May, particularly new roles for local organs of the government and party. It is already apparent that certain changes such as theof the "national" conalttees which support mainly local servicesevision of the party's functions on a local level will cause much debate and probably will create dissension.

General Program

Paced with Inefficientand agriculture which have caused econonic stagnation tne Novotny regime at the end3ew economic program designed to bring about fundamental in the economy, partly by revamping the system ofand management. The program was designed tomore sensible criteria for economic decisions, and, in particular, to increasedecision-making at lower levels, but withouthreat to political leadership.

On paper tho economicappears to bo the-most

liberal proposed for any bloc country, but in practice the changes to be made aro no nore liberal than those adopted in other East European countries. In central planning, thecalls for emphasis to bo further shifted from inflexible, short-term Quantitative goals to establishment of broad, long-term guidelines. oreprice system and aof management are to be introduced. Individual enterprises are to be allowed to determine many of their own short-range production plans, set some prices, and have more control over disposition of their earnings. Increasedincentives are stressod as the major road to higher

living standards. However,to economic growth by both individual workers and enterpriwes would be the basis

for determining the extent of

these incentives.

The Prague regime is now taking the first cautious steps to put the reform into effect throughout the country. extensive experiments were conductedn selected enterprises insome of the principles of tho new system, the regime han made clear that completeof the new economicwill not be achieved soon, and will in fact be dependent upon the carrying outrice reform in Thehas no intention ofompletely free market economy, and theof many essential elementsommand economy in itself will limit the extent of changes that can be made.

A number of centralwill continue to exist in the economy. The regime will continue to rely largely onprices;mall portion (aboutercent) of the prices are to be freely set and these only for luxurygoods. Labor allocations and important investments will continue to bo made centrally, but the individual laborer's right to change jobs voluntarily will for the first timo be legal the industrial branchare expected to exertcontrols over their subsidiary enterprises, but the degree of control will not be

uniform.

The party is devoting considerable attention to the application of scientific and technical knowledge and higher standards of efficiencyeans of raising the quality and technicaland thus the salability, of Czechoslovak goods at homo. Goods are to be improved so as to be competitive on the world market in order to bring in needed foreign currency and improve Czechoslovakia'strade balance.

Scheduled Implemcntat1on6

Last November the party central committee made certain organizational and personnel changes in the central organs of Kovernnent to enable them better to carry out their new functions of long-range planning

Three existing ministries ot machine building andwere mergedingle Ministry of Heavy Industry. In December the stuffs of existing and newly created statewere augmented by from economic ministries and factories, as well as from the academic institutions that were prominent in the debate on economic reform. Those changes had been preceded by an industrial reorganization45 In which industrial enterprises wereunder approximatelyranch managements instead of thehich existed before.

Implementation of the new program began6 in all industrial, trade,

Page 2

CBL REPORT

an 66

t

construction enterprises, the services and purchasinglocal industry, and ln the motor vehicle transportation field. In such areas asand other transportation fields, where tho reforms are not to be introducedxperiments will continue to be conducted over tho next year.

Industrial branch aanagers are now to take greaterfor their enterprises, and profits are to be themeasure of success or failure. To what extent the branch managers will be willing or able to exercise their new prerogatives remains to be seen. Enterprises will now be able to draw up their own production plans in which demand for their products willorerole, and fewor detailed plans will be Imposed from above. Because many individualmust pay wages fromwages will therefore be more directly dependent upon good results. Wages in anwill be subject to upper Units eiling on the growth of wages) and lower Halts uaranteed wage). ood nana-gertaff of energetic workers should be able to pay wages well above the lower

The goals established for6 draft economic plan in general follow those set forth in the previously publishedprogramnd take into account the moderate achievements Increases slated for national4 percent), industrial output6

percent, and investment 6 arc within the range of annual goals established inlan. Inthe greatest increases in production arc planned for83 percent), and chemicals Attempts will be made to effect structural changes in the heavy engineering industry so as to improve the technical standards of Czechoslovak heavy engineering products.

The Role of Agriculture

Regime officials recognize that sound development of the entire economy cannotore rapid growth in the rate ofproduction. In order to compensate for poor results achieved in agriculturespecially in crop production, gross agricultural output6 is slated to increase more than the annual growth rate required to meet0 goal,

Although the agricultural sector is not scheduled to change overew systemumber of steps will be taken in the interim to promoteln agricultural. Increased incentives and efforts to reduce production costs are to be adopted this year to stimulate the interest of farmers and managers, in production results. An improved management system for agriculture, including more authority for producing units, is to be introduced as another stimulant to improve performance, and steps are to be taken to

onstant level of nan-power in agriculture oreover, the agriculturalis slated toore equipment than it did5 and. along with this, certain specified measures are to be applied to overcome the perennial problem of maintenance of agricultural equipment.

Party Control

The recently published theses for the party congress to be held in Way reaffirm the party's loading role over the economy, as did the official document on economic reform. The party is to be the major element guiding introduction of the program and "selling" it to the people. Regional and district coomittees and allparty organizations areto put their authority behind the implementation of the new system. Under thetbe local party units have been told that they are not to guide production directly or even to share responsibilities for decisions of economic Their principal function is to provide managers withsupport in applying ecoolicy. Many local party leaders object to this formula since it could lead to areduction of their author-ity.

The "national" committees, which are governmental bodies functioning at local levels, are to have greater financial responsibilities at all levelsregionalt district

and town. As in the past, they are mainly responsible for local services, including social wel-faro and cultural measures. The party theses point out that the national committees must achieve maximum self-sufficiency but presumably theparty officials will watch this closely lest the national committees attempt to become too independent. Their roleis the central organs, regional planning, and agriculturalis to be set forth in the coming months.

The party central committee hasonference ofof regional and districtcommittees and of national coamittees of major cities for the near future to delineate the role of the national conmittees and how their greater responsibilities can bewith management of the economy. These changes haveled to debate and some dissension in the party andwhich are likely toas the final formulations arc prepared for tho party con-

The central conmlttec has published the theses so thatdiscussions on them can take place at nationwideto be held prior to another central committee plenary session to be held in May. At that time the6 economic plan will be re-examined, and anof Czechoslovak economic policy is to be made forbv the party congress.

selwket

Page 4 SPECIAL REPORT an G6

: od'k

Itlear that theis committed to thebut the neweparture from past practices that party are still groping their way. Both the timing andof the programwill be kept sufficiently flexible to avoid insofar as possible severe economic or political dislocations.

It Is probably in light especially ln thegoods Industry, that the reforcs willhance to make the greatest headway for the short run. If the program as presently outlined does not succeed in overcomingmore serious econoalc problems in the long run, other new methods for their solution will haju to be considered. IL)

ET

Original document.

Comment about this article or add new information about this topic:

CAPTCHA