Estonia: Peter Lohmus, the Vice-President of the Bank of Estonia, said that the current account deficit of Estonia's balance of payments grew to 13 per cent of the Gross Domestic Product (GDP) in 1997. Further measures might be needed to balance the development of the economy. The high current account deficit will mean that economic policies should be kept tightened and the dependency on the inflow of foreign capital controlled.

On 25 March, the Estonian Parliament ratified an agreement signed in Riga in November, concerning the abolition of non-tariff trade barriers in Baltic trade. The Treaty eliminates the possibility of one of three Baltic states setting additional requirements to imported goods, other than those set according to European standards.

The Estonian Finance Ministry will credit the Stabilisation Fund with 300 million kroons (US$20.4 million) of the state budget fund. The Fund was earlier credited with 700 million kroons, and will be increased by another 300 million kroons from last year's surplus revenues. According to Helju Valdre, Manager of the State Treasury, the Stabilisation Fund, set up as a safety measure against possible economic setbacks, is to receive 1.2 billion kroons this year.

Hungary: the new 100 billion forint ($475,059) underground line in Budapest is planned to be constructed and completed by the year 2003. The funds for the construction will come from foreign loans (60 per cent) and from central funds. The foreign loans are to come from the European Investment Bank, the Scandinavian Nordic Investment Bank, and the German Creditanstalt fur Wiederaubau.

The National Bank of Hungary announced that it reduced its main deposit and repo rates by 37.5 basic points. The Bank lowered its one month deposit rate, the most important for investors in Hungarian domestic bonds, to an annual 18.875 from 19.25 per cent, its overnight and one week repo rates to 24.375 per cent, and its one week deposit rate to 18.375 per cent.

Latvia: the Government has adopted an intermediate term economic strategy until the year 2003. The main issues are to complete privatisation, to continue measures aimed at liberalisation of trade, and to stabilise the tax system and tighten monetary and fiscal policies. This will be done by keeping both the revenues and expenditure of the state in balance. The strategy also aims to promote export and to attract foreign investment . It forecasts that the GDP should grow between five and six per cent, and inflation will stabilise at about four per cent in 2003. The state's investment should be at the level of 2.5 per cent of the GDP in 2003, and the total debt of the country should be no more than ten per cent of GDP, with the fiscal deficit at 0.5 per cent of GDP. The strategy should be submitted to the European Commission by the end of March and revised each year.

According to the Latvian Central Statistical Bureau, industrial output decreased by 3.1 per cent between January and February, but increased by 12.5 per cent over January and February 1997.

Lithuania: the Bank of Lithuania confirmed that the current account deficit reached 3.8 billion litas ($950 million) in 1997, or ten per cent of the GDP. Last year the current account was presented at 2.6 billion litas, or 9.2 per cent of the GDP. Reinoldijus Sarkinas, Board Chair of the Bank, said that the major task of the financial policy is to combat the short-term foreign capital inflow and to cut down on borrowing for consumption. The country's external debt totals 21 per cent of GDP.

Poland: the European Bank for Reconstruction and Development (EBRD) said that it intends to invest $150 milllion in the construction of part of a motorway in Poland. The motorway will connect Gdansk (northern Poland) and Torun (central Poland).

Russia: on the instruction of the Russian President, Boris Yeltsin, the Federal Government has drawn up two decrees to cut oil companies' taxation and speed up allocation payments. The two decrees aim to back oil companies, following the fall of the world's oil prices in the last twelve months.

On 25 March, Alexei Kudrin, Russia's First Deputy Finance Minister, said that the Government intends to launch a new programme for regional debt re-structuring. He said that all funds remitted to the regions will only be allocated for justified needs. All other projects should be financed from regional resources.

On 26 March, the Russian President, Boris Yeltsin, signed a law on "the federal budget for the year 1998". The main aims of the economic policy are to set up growth of the GDP and industrial output by at least two per cent, to increase agricultural production, and the growth of the populations real income by not less than three per cent. Boris Yeltsin has also recommended that within a month of the implementation of the law, the Government should submit a schedule of payment of state allowances and child benefit to the State Duma.

Yelena Telegina, Head of the Department for Foreign Economic Activity of the Fuel and Energy Ministry, confirmed that, on 1 April, Moscow will host the first meeting of fuel and energy ministries from G-8 countries. The meeting will be chaired by the Acting Head of the Russian Fuel and Energy Ministry, Viktor Ott, and British Minister of Trade, Margaret Beckett.

The Russian Government plans to cut jobs for more than 200,000 state employees, including 68,000 teachers and 22,000 medical staff. It also plans to cut 40 billion roubles ($6.6 billion) from its spending commitments. Alexei Kudrin, Deputy Finance Minister, explained how it was part of a radical austerity programme, aimed at bolstering the country's shaky public finances. (FT 26/03/98)

Czech Republic: Farmak Olomouc, the chemical and pharmaceutical producer, reported a 12.7 million crowns ($369,186) net profit for 1997, a three million crown increase compared to 1996. The company's export orientated policy focuses on raising receipts from exports (which made up to 55 per cent of the receipts) and to maintain revenues from the domestic market.

Pivovar Pardubice, the beer producer, recorded a loss of 950,000 crowns in 1997. However, according to Jaroslav Cihlo, the company CEO, this was an improvement on the 11.5 million crowns lost in 1996.

Kazakhstan: during an extraordinary meeting of shareholders, Meta-Impex, a commercial bank, gave Oneximbank the rights to acquire controlling interest in the Bank. At the same time a decision was passed to change the name of the Bank to TatOneximbank, and to elect a new Board of Directors. Furthermore, it was decided that the statutory capital should be raised to 40 million roubles ($6.55 million), through its fifth issue of shares.

Latvia: Unibanka, Latvia's largest bank in terms of share capital, is planning to direct its 1997 profit into its share capital, which will be increased by 3 ,634,719 lats (US$6.1 million). The Bank's assets are to increase between 33 and 35 per cent, and will amount to 330 million lats by the end of 1998. Unibanka's shares are quoted on the Riga Stock Exchange and on the international markets in London and Berlin.

Lithuania: according to Reinoldijus Sarkinas, Chair of the Bank of Lithuania, following last year÷s profit of 72 million litas, in 1997 the Bank earned 30.2 million litas ($7.5 million) in net profit. The Central Bank's revenues in 1997 came to 233.8 million litas, while expenditures amounted to 203.6 million litas.

The Lithuanian Development Bank (LDB) gained status as a commercial bank, approved by the Lithuanian Cabinet. The Cabinet controls 29.6 per cent of the LDB, established three years ago. The EBRD holds 29.63 per cent of the Bank . The rest is owned by the Nordic Investment Bank (18.2 per cent), the German DEG development agency, and Swedfund of Sweden, both holding 11.11 per cent stakes.

Poland: Polish carrier Lot and General Electric have signed an agreement to form a joint venture company in the field of aircraft engine servicing, announced Lot's Vice-President, Andrzej Slodownik. Lot will hold 51 per cent of the new company and GE 49 per cent. The new venture should be formally set up in the first half of 1999.

Société General Investment Bank has bought 2.2 million shares in the Polish brewery company, Okocim SA, increasing its stake in the company to 10.12 per cent. Carlsberg, the Danish beer producer, also has a 31.8 per cent share in Okocim.

Slovakia: steel company VSZ Holding a.s., based in Kosice, south-eastern Slovakia, recorded a net profit of 595 million crowns in 1997, down by 55.86 per cent reported in 1996. The Company attribute the drop in profits to weaker prices in sales during the first half of 1997, the negative impact of the dollar exchange rate, higher interest rates and higher costs of services to new capital activities.

According to the Slovak Statistics Office, the CPI index in February was up by 7.5 per cent over February 1996, following a 7.2 per cent growth in January( year-on-year basis).

The National Labour Office reported that unemployment in Slovakia reached 13.56 per cent at the end of February, up from 13.44 per cent in January.

Russia: the Swedish company Ericsson has won a tender on the deployment of an open multimedia network of Rostelekom. According to the agreement signed in Moscow, the relevant equipment for visual and vocal data transmission will be installed in 88 areas of the Russian Federation. The first stage of the project will cost $11.5 million.

Latvia: the Latvian Privatisation Agency has submitted a package of documents to the Stock Market Commission to register Ventspils Nafta (VN) oil company's securities, and to get permissoin to put 60,298,121 shares with a face of one lat ($0.6) into public circulation. The prospectus on the issue of VN shares will be quoted on the Riga Stock Exchange and is expected to be completed in May.

Poland: the city of Cracow, southern Poland, proposed the issuing of city bonds worth 148 million zlotys ($42.8 million). In September this year the city treasurer, Leslaw Fijal, said that funds raised through the issue would be set aside for re-financing of the city's 55 million zloty credit drawn in 1997, and for the city infrastructure. The face value of the bonds will be in US dollars (US$) and Deutsch Marks (DM), and will be sold on the international markets.

Russia: the Ministry of Finance, acting on behalf of the Russian Federation, launched the second Eurobond issue in Frankfurt, denominated in DMs. The initial volume of the issue was set at between DM750 million and DM one billion (US$555 million), with a maturity of five to seven years.

The Moscow Interbank Currency Exchange (MICEX ) is to transfer to a non-profit partnership, the National Depository Centre (NDC) The transfer of functions followed the re-organisation of the servicing infrastructure of the government bond market. The new partnership will start operations on 30 March

Lithuania: the consortium headed by the Banque Paribas, the French bank, has been chosen to advise the Lithuanian Government on the privatisation of Mazeikiu Nafta oil refinery. The French bank will also advise the administration on the sell out of Butinges Nafta oil terminal and Naftotiekis oil.

Central Europe: on 27 March the German Bundestag approved the ratification of the North Atlantic Treaty Organisation (NATO) enlargement to include Poland, the Czech Republic and Hungary. The law ratifying the protocols was supported by the deputies of the ruling coalition of the Christian Democratic and Christian Social Union, the free Democratic Party (CDU/CSU-FDP), and by the deputies of the Social Democratic Party of Germany. It was rejected by the post-communist Party of Democratic Socialism (PDS).

Poland: Krzysztof Janik, General Secretary of the Democratic Left Alliance (SLD), confirmed that the party intends to make a contra against the Government's proposal of territorial administrative reforms, which concludes the division of the Polish territory to 12 provinces instead of the current 49. SLD's proposition to change the number of provinces to 17 will be presented to the Sejm. The SLD proposal follows the protest of those provinces which are to be struck off the administrative map. According to Richard Czarnecki, Head of Poland's European Integration Committee, the reason for the reform is to create larger, autonomous provinces, which would allow for more effective distribution of European Union (EU) assistance funds. Poland could expect between six and eight million ECU annually from the EU between the year 2000 and 2006.

Russia: Mikhail Delyagin, a domestic issues economist, said that after the resignation of the Russian Government, the challenge will raise the effectiveness of the Cabinet and will improve the policy of the Government.

President Boris Yeltsin hailed a summit with the leaders of France and Germany as a milestone in the creation of a "Greater Europe". The German Chancellor, Helmut Kohl, emphasised that the troika's dialogue was in no way an anti-American alliance, and that the meeting was not intended to be against anyone. (FT 27/03/98)

Slovakia: Slovak Deputy Prime Minister, Jozef Kalman, was nominated as the first candidate for the third round presidential elections, to be held on 16 April. The ruling Movement for a Democratic Slovakia, HZDS, named his candidate to run for the presidential post, as Augustin Huska, who is also a Chair of the Slovak Parliament.

Exchange rates (27 March)

Rates derive from the FT as of 27 March 1998.
Rates for Georgia, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan provided by the National Banks of each country