There was a time, in the wake of the collapse of the Soviet Union, when Hungary was viewed as the country most likely to become a darling of Western investors. Poland then assumed that mantle, its government privatising local banks and crumbling state firms and establishing it as a regional securities hub.
But question marks now hang over both those countries’ futures. Each has in recent years enforced regulatory changes that investors have questioned; both now, by popular choice, have voted in right-of-centre governments that struggle to see eye-to-eye with Brussels.
Yet few investors have any such qualms about the Czech Republic, a small and developed central European nation of 10.5 million people. Very quietly, it has become a salient voice of financial reason in the region due in no little part to the quiet influence of Andrey Babisˇ, the country’s lean, driven finance minister.
In a region often distrustful of the nexus of politics and power, Babisˇ shouldn’t really exist. The billionaire made his fortune building a privately run agriculture-to-chemicals powerhouse, Agrofert, with operations across the Czech Republic, Slovakia and Germany. Yet his wealth has done him little political damage: he remains one of the country’s most popular legislators.
This can to a large extent be explained by his management of the nation’s money since taking the helm at the finance ministry in January 2014. Unlike several countries around the region — Poland and Romania come to mind — the Czech Republic boasts a current account surplus. The sovereign is rated A1 by Moody’s and AA- by Standard & Poor’s. Growth is expected to dip slightly this year, to 2.5% from 4.2%, yet the jobless rate is hovering around the 5% level, on a par with Norway and the United Kingdom.
Economists point to the finance ministry’s straightforward approach to dealing with investors. “They are very straightforward and very clear in how they go about communicating with investors and analysts. Good communication is not always something you find in the region,” says a leading CEE-area economist. “They have flirted at times with an unconventional financial policy but they always tell you why they are doing it.”
Babisˇ has found other ways to stand out too. His was a voice of reason in the days after Britain’s decision in June 2016 to leave the European Union, urging Brussels not to push the UK peremptorily out the door. And investors love the country. The Czech Republic has become the region’s biggest draw for capital in recent years, overtaking — again — Hungary and Poland, a fact that is in no small part due to the popular, pragmatic billionaire at the helm of the finance ministry.