(FORTUNE Magazine) – The prosperous Czech Republic faces an unusual problem: too much foreign capital. The central bank's reserves of Western currency rose from $3.8 billion to some $5.3 billion in this year's first nine months. Fearing that too much of a good thing might lift Prague's inflation rate -- now less than 10% -- the government is sending signals that it wants to slow the flood of foreign money. This spring Prime Minister Vaclav Klaus blocked a plan to sell the country's two oil-refining companies to a foreign consortium that included Total, Agip, Royal Dutch/Shell, and Conoco. And in August the Central Bank said it will repay early $471 million in standby credits it drew from the International Monetary Fund in the wake of last year's divorce from Slovakia. That makes it the first country in the old Eastern Bloc to do without IMF aid. Klaus is scrutinizing foreigners closely after being burned by Volkswagen's decision last December to put the brakes on its investment in auto manufacturer Skoda. The Czechs can afford to be choosy. While the rest of Europe faces an 11% average jobless rate, Czech unemployment is running at 3.2%, kept low by a burgeoning service sector that helps replace lost factory jobs. Some forecasters predict the Czech economy will grow 5% in 1995, up from around 3% this year. Trade has been redirected westward from old Eastern bloc partners, and exports are growing solidly. A massive privatization effort that is just concluding has created a nation of shareholders. "This is already a Western country," says Zdenek Bakala, a former Crdit Suisse executive who founded Patria Finance, the first Czech investment bank. "No other country in Eastern Europe even comes close."

CHART: NOT AVAILABLE CREDIT: FORTUNE TABLE/SOURCE: EASTERN EUROPE MONITOR CAPTION: HOW EASTERN EUROPE STACKS UP