So called small privatisation (small factories, real estate, retail stores, restaurants, hotels, repair shops etc.) was proceeding swiftly since early 1991 and was more or less accomplished by the end of 1992. It went by auctions, but also restitution of property to its former owners played a very important part and contributed to the success of the programme. In large privatisation (large state-owned enterprises), one part of the property was sold, another part was distributed free of charge to the entire population, through so-called investment vouchers. Standard methods such as direct sale, auctions, public tenders, and transfers of property to municipalities were used along with the voucher scheme. Foreign investors were, and are, welcome; in fact, the program of rapid and mass privatisation in the Czech Republic offered foreign investors an opportunity which will not be repeated in future. Privatisation of an almost fully state-owned economy is a task which requires years rather than months. Now the bulk of privatisation has been accomplished, and it is starting to influence positively the performance of the economy. Within the last six years the share of private sector jumped from 3 to 75 per cent. But the problem of behaviour of the new owners, and of effective corporate governance, is still rather acute in the Czech Republic. Special problems are posed by the large ownership of equity by investment funds which emerged during the voucher privatisation, as well as by large banks which themselves are still partly in state hands.

Accordingly, the strategy followed aimed at a simultaneous implementation of the package of interrelated measures in order to secure sufficient impact on the behaviour of economic agents. Given the above general consensus, there were, however, widely differentiated stances as regards the contents of the respective “minimum packages”, their sequencing and the speed of their implementation. In previous discussions two alternative options - “fast” and “slow” movers - used to be identified as a shock therapy approach against a step-by-step, gradualistic or evolutionary type of approach. BIS Review 25/1997  -3-  The Czechoslovak scenario opted for a transition path which was implemented as quickly as feasible, implying some parallel features with the shock therapy approach, in particular with reference to one stroke, simultaneous liberalisation of domestic prices, foreign trade and foreign exchange, and the introduction of limited currency convertibility (on current account for registered domestic businesses) at the very beginning of the transition process. The shock therapy approach was developed for the stabilisation programmes and followed in some countries of Latin America as well as in Poland and former Yugoslavia, where the dominant target of the economic policy was to cope with hyperinflation, to stabilise the economy as much and as fast as possible. The initial conditions in the CSFR differed, however, from those of the countries mentioned. Strategy of systemic and structural reforms The programme of political and economic transformation was formed during 1990, started in January 1991, and continued in the Czech Republic after the split of Czechoslovakia.