Kazakhstan: A compromising agreement between the Kazakhstan government and the Canadian mining group Placer Dome has been reached after two years of dispute over one of the largest gold deposits in the world in Vasilkovskoye. According to the agreement, Kazakhstan has paid US$25 million cash of the $35 million claimed by the Canadian company. Placer Dome, Canada's second largest gold group, made a deal to develop Vasilkovskoye gold mine in 1995, snatching this contract away from its Canadian rival company, Dominion Mining. Placer then abandoned this project claiming that it was very expensive to develop, claiming $35m from the Kazakhstan government as a refund of its deposit. The government then turned to the consortium of Teck Corporation of Canada and First Dynasty, a venture of Canadian entrepreneur Robert Friendland, and started proceedings against Placer for the damages arising from alleged 'breaches of agreement'.

Kyrgyzstan: On 10 October in the Kyrgyz Republic capital Bishkek, Kyrgyzstan and Russian delegations resumed negotiations on economic co-operation and the improvement of trade between both countries. The main issues include customs agreements and Kyrgyz relations with the World Trade Organisation (WTO). Anatoly Adamishin, Russia's minister for co-operation with the CIS countries, said during the negotiations that the Kyrgyz Republic accounts for only one per cent of the total trade turnover with CIS republics and fell to US$69.7m in the first quarter of 1997 from $201.4m in 1994. The bilateral trade is very limited, referring only to the group of commodities such as sugar, tobacco, cotton and fruits that Russia imports from Kyrgyzstan and fuel, timber, plastics, iron and steel exported from Russia.

Latvia: Latvian Finance Minister Robert Zile made a statement after coming back from the World Bank meeting held in Hong Hong at the end of September. Zile and the World Bank president James Wolfensohn discussed problems regarding World Bank programmes and projects in Latvia. Latvia has been a member country of the World Bank since 1992 and it owns 1,384 bank shares worth US$166.9 million.The World Bank helped Latvia by investing $489.6m to carry out existing projects and is planning to invest $124.1m into new projects. Latvia is also considering joining a social development fund which gives money for social projects. During the conference, Mr Zile also met the representatives of EBRD and discussed the possibility of holding the bank's annual meeting in 2000 in Latvia÷s capital Riga.

Lithuania: Two Lithuanian government agencies responsible for boosting foreign investment and exports, The Lithuanian Investment Agency and Lithuanian Export Promotion Agency, have merged into the Lithuanian Development Agency. LDA will be managed by the Ministry of European Affairs which is in charge of the privatisaton and promotion of the Lithuanian economy and opportunities. The new agency will also look after matching local and foreign business partners and faciliate communication between the business community and Lithuanian governmental bodies. The agency opened representative offices in Frankfurt and Hahn in Germany and is planning to open offices in St Petersburg , Moscow and in Taiwan.

Poland: One of the Special Economic Zones, launched two years ago, the Euro-Park Mielec, has provided jobs for 1,000 people since its launch, and aims to bring this figure to 7,000 within the next 20 years.The manager of the Euro-Park Mielec operations, Mariusz Bledowski, reported a rise in revenue from 2.37m zloty in 1995 to 5.41m zloty (US$1.5m) in the first half of 1997. The zone attracted 26 companies investing more than 91m zloty in the first half of 1997, some of them foreign, and Mr Bledowski expected that this figure should soon double.

Finance Minister Marek Belka said on 6 October, eleven days before his resignation in connection with the changing of the government, that Poland should bypass the current account deficit crisis that has hit other emerging economies of Central Europe because of the smaller than planned 1997 fiscal deficit and a tight 1998 budget and restrictive monetary policy. The current account deficit reached US$3.04bn in the first seven months of 1997.

Daewoo Motors of Korea launched the production of its Lanos car model at its Zeran plant near Warsaw on 7 October. The car will be produced exclusively in Poland and will be exported to all European countries by the year 2000. The Daewoo Group president Kim Woo-Chong said that the company expects to produce 250,000 units a year by 2,000 and will also start to assemble the Leganza and Nubira models in 1997.

According to a study by the World Bank, Poland will need to upgrade its water and air standards before joining the EU and will need to invest about US$40bn. Gordon Hughes, the author of the report, pointed out that this is one of the most important objectives before the final talks. Presently, Poland spends $1bn a year on water treatment. The World Bank report also pointed out that Poland had made progress in cleaning up its air by reducing sulphur emissions but will still need to invest up to $3.5bn on meeting EU sulphur emission targets that were set up by EU for the years 2005 and 2010.

Russia: According to the deputy Finance Minister, Mikhail Kasyanov, Russia has settled US$560m of its $700m debt to Slovakia between 1995 and 1997. During the Russian-Slovakian session of intergovernmental commission for trade and economic co-operation on 9 October, Kasyanov stated that under the 1995 intergovernmental agreement, Russia had to settle part of its outstanding debt by deliveries of its goods equivalent to $180m.

Russia and its western commercial creditors finally signed an agreement in Moscow on 6 October on the restructuring of its US$33bn debt and interest owed to the London Club of creditors. The restructuring of the defaulted loans was negotiated over the past 18 months and covered $24bn of loans and $9bn in outstanding interest payments since the collapse of Soviet Union in 1991. The agreement is one of the biggest debt restructuring schemes in the emerging markets and it should raise the credit rating for Russia. According to the deal Russia will not have to start repayment for seven years.

The representatives of Russian and Canadian commercial banks met on 8 October in Montreal for the first time, for two days.The Russian-Canadian Financial Forum was organised by the Russian State Duma and by the Association of Russian Banks. The representatives of forty Russian and Canadian banks, together with some governmental bodies from both countries, are aiming to form a body that will emphasise the development of Russian-Canadian business relations.

SBS Agro, one of the top Russian banks, signed an agreement with the United States International Development Cooperation Agency to join an agency programme for guaranteed bank loans. The board chairman affiliated with SBS Agro bank, Agroprombank, Mr Alexei Rasskazov, said on 8 October in Moscow during the press conference that the agreement will help banks to implement the regional crediting and investment policies. The programme focuses on granting credits to small and medium sized companies with a limit of US$150,000 provided for up to five years for one company and a total guarantee for the bank of $6m. The crediting will be made preliminary from the bank assets, with the agency guaranteeing the recovery of 50 per cent of net losses on the basic loans.

Ruslan Kutaev, the advisor to the president of the Chechen Republic, Mr Aslan Maskhadov, confirmed in an interview for the Russian press Novosti on 10 October that the Security Council of the Russian Federation has been closely monitoring the funds in terms of 40bn roubles transferred in September as a part of an agreed 470bn roubles(US$80.1bn) promised to the Chechen Republic. The funds were allocated to support the rehabilitatoin of the Chechen economy.

Poland: Marian Krzaklewski, the leader of the Solidarity Election Action (AWS) party and Leszek Balcerowicz, the leader of Freedom Union (UW) are to discuss a new cabinet line-up. According to a poll conducted by the Social Research Institute (PBS), the most probable candidate for the new Prime Minister's office is Leszek Balcerowicz (27 per cent), followed by Marian Krzaklewski the academic, with close ties to Solidarity, professor Andrzej Wiszniewski. The two winning parties are also discussing the division of ministries. AWS would like to control the Ministry of Internal Affairs and Administration, Treasury Ministry and Labour Ministry, while UW will overlook the Ministry of Finance and Foreign Ministry.

Former president of Poland Lech Walesa has registered a new political party called the Christian Democracy of the Third Republic of Poland (ChDTR), with the aim of mustering support for the AWS. Mr Walesa declared that the new party did not intend to compete with the AWS but will take part in the next parliamentary elections as a separate party.

In the latest poll conducted by the Public Opinion Research Center, 68 per cent of the Polish population favour a democtratic government represented by the electorate of Solidarity Election Action (AWS) and Freedom Union and only 21 per cent support the old communist system.

Russia: Boris Yeltsin made a statement on 9 October during the summit of a Council of Europe in Strasbourg that he will stand for the third term of his presidential post. Under the Russian present constitution the president can keep his post only for two terms, but as Mr Yeltsin had been elected in 1991 under the old constitution there has been some speculation that he would put his candidature for the next run.

Czech Republic: Elektarny Opatovice, a listed Prague power company, sold its 48 per cent stake for $160m to the UK electricity generator National Power. With this deal, National Power has established its position in the growing Central European market and is considering similar deals in Poland and Hungary. The company is planning to develop a network of electricity plants across the Czech Republic.

Poland: Two Polish companies, CPN SA, fuel distribution network and Polskie Sieci Elektroenergetyczne, power grid company, led the list of the 100 largest Central European companies, compiled by Deloitte & Touche. The list also comprises another 39 Polish companies along with 24 Czech companies, 11 companies from Hungary and 11 Slovakian firms. Other Polish companies on the list are the state railway concern PKP, placed fourth, followed by the refinery Petrochemia Plock SA, and Telekomunikacja Polska SA (TPSA), representing the telecom sector.

Russia: According to RIA Novosti, Bashneft, one of the biggest oil companies in Russia is completing the assembly of the Uralmash-3D-76 drilling instalation designed to drill a deep oil well with a projected depth of 4,500 metres, that will start operating this month. A sufficient infrastructure in terms of a road network and power transmission lines was constructed to support this project.

Rossiisky Kredit Bank and the Japanese Association for trade with Russia and Eastern Europe held a conference in Moscow to enhance Japanese investment into the region. The conference particularly emphasised the possibilities of long-term co-operation between Japanese companies and Rosiisky Kredit branches in Eastern Siberia and the Far East of Russia.

CAPITAL MARKETS

Bulgaria: The first eurobond is expected to be launched in the first quarter of 1998. The eurobond will be for $250m with a maturity of between two and five years. Bulgaria appointed JP Morgan and Merrill Lynch as rating advisers and lead managers. Bulgaria received a positive credit rating of Ba3 by Moody's a year ago and is considered at a similar rating by other agencies.

Poland: Warsaw Stock Exchange will introduce new regulations on listing requirements and trading rules taking effect from 16 October. According to Mr Ryszard Czerniawski, the WSE deputy head, the new rules would allow the WSE management to point out companies that are not functioning properly. The new regulations will also streamline procedures for placing on the market new share issues of firms already listed on the stock exchange. The last change will concern the listing requirements, lifting the minimum book value from 24 m zloty to 36m zloty (US$10.6m) for the main market and from 12m zloty to 18m zloty for the parallel market.

The Treasury Minister Miroslaw Pietrewicz has made a final decision regarding the sale of Poland's largest state-owned insurance broker, Powszechny Zaklad Ubezpieczen (PZU). Seventeen potential bidders for the PZU were selected from institutional investors to purchase 19-34 per cent of the company, raising its share capital by 51.6 per cent. According to the Polish daily Zycie, the potential investors include the US American Investment Group, bank PEKAO SA, and Bank Ochrony Srodowiska.

Six of the 15 existing National Investment Funds (NIFs) plan to exchange their minority stakes in 170 companies, aiming to consolidate holdings by the end of the year. Mr Witold Rawanski of NIF Magna Polonia said that this is the second consolidation after 1996 and the present operation of exchanging 1.93 per cent in 170 companies making their holdings bigger and leaving each of the funds with nine per cent stakes in 27 companies. Shares of unprofitable companies and those listed on the Warsaw Stock Exchange will be excluded .

Poland is marking the first privatisation within the energy sector, with the French consortium Electricité de France (EDF) which paid US$89.75m for a 55 per cent majority stake in the electric and heating plant, Elektrocieplownia Krakow SA. The Electrocieplownia's employees will maintain 15 per cent, the State Treasury will hold 25 per cent and the remaining five per cent will be retained for the privatisation purposes. EDF is planning to invest $27m over the next five years.

Deutsche Morgan Grenfell was selected as a manager of the 55m zloty eurobond issue by Krakow municipality, confirmed Krakow's deputy mayor Krzysztof Pakonski. The eurobond, with an annual interest rate of 6.5 per cent, will be sold on the international market. The city will use the money to construct a rapid tram line and to modernise its roads network.

Russia: The privatisation of the last Russian big state-owned oil companies Rosneft has been cleared when Sidanco, another oil company controlled by the Uneximbank group, dropped its ownership to the main Rosneft production subsidiary of Purneftegaz, producer of more than 8m tonnes of crude oil a year. The privatisation of Rosneft is planned to take place within the next six months.