Bosnia Herzegovina: on 29 May, Jadranko Prlic, Foreign Minister of Bosnia-Herzegovina, signed a trade agreement with the Czech Industry and Trade Minister, Karel Kuhnl, on trade and co-operation between the two countries. The agreement provides for the creation of a joint commission to deal with co-operation in the automotive industry, the energy and transport sectors, and the chemical and pharmaceutical industries.

Bulgaria: on 15 May, the International Monetary Fund (IMF) approved a US$165 million loan to Bulgaria, the last two instalments of a $500 million standby loan to support the reform programme.

The Finance Minister, Mouravey Radev, announced that the 1997 budget deficit was below target. At $237.5 million, it represented 2.5 per cent of the Gross Domestic Product (GDP). The deficit was previously projected as $564.1 million, or 6.2 per cent of GDP.

Estonia: in September, Estonia and Hungary will sign a free trade agreement following talks between the two countries in Budapest on 25 May. According to the Estonian Foreign Ministry spokeswoman, Ehtel Halliste, the agreement will take effect in January 1999. Estonia exported 19.94 million kroons ($1.4 million) worth of goods to Hungary in 1997, whereas imports from that country totalled 256.88 million kroons.($18.1 million). Trade with Hungary accounted for 0.3 per cent of the country's total foreign trade.

Hungary: an agreement was signed between a bank consortium led by the Central European International Bank (CIB) and the Ikarus Body and Coach Building Works, on a syndicate credit of $14.6 million. The other banks in the consortium were Hypo-bank Hungaria, The National Savings and Commercial Bank, and the Hungarian Foreign Bank.

Poland: on 28 May, the Head of Poland's central bank, Hanna Gronkiewicz-Waltz, said that the situation in Russia will be responsible for a temporary weakening of the Polish zloty, but will not have a long-term effect on the zloty exchange rate.

The Vice-President of the National Bank of Poland (NBP), Jerzy Stopyra, said that the Bank expects greater demand from foreign investors in the Polish zloty. This follows the introduction of the Euro and its encouragement by Poland's good economic situation, a low budget deficit and low inflation, which is projected to curb to three per cent by the year 2003. He also said that the Polish zloty rate in relation to the Euro should be stabilised.

Leszek Balcerowicz, Deputy Prime Minister and Minister of Finance, said that experts from the World Bank will arrive in Poland to inspect the latest mining reform schemes next week. Balcerowicz added that the World Bank, which is to provide most of the funds for the reconstruction of the mining industry, has been waiting for a workable reform scheme for four years.

Polish exports soared by 24 per cent in the first quarter of this year, despite an eight per cent appreciation, in real terms, of the Polish zloty. Exports grew to $7.2 billion, while imports only grew by 17 per cent to $10.4 billion.

On 25 May the European Commission said that the European Union (EU) cut its PHARE aid for Poland for 1998 by 34 million European Currency Units (ECUs) ($30.1 million). Poland will now receive 178 million ECUs instead of the 212 million originally planned.

Romania: the Ministry of Reform announced that the Government has approved a bill on regional development, requiring a $36 million grant drawn out of the EU.

Russia: Sergei Kiriyenko, the new Finance Minister, said that the Russian Government is seeking help from the IMF in a domestic debt re-structuring programme. He confirmed that the Government would try to retire its high yielding, rouble denominated domestic loans with longer-term, hard currency borrowing.

On 27 May, Russian Central Bank tripled interest rates to 150 per cent, in an effort to defend the rouble and to restore stability to the financial system. The rise came in response to turmoil on Russian markets, where share prices fell by almost 15 per cent last week and almost 40 per cent since the start of the month.

Czech Republic: on 26 May, the CNB reported that foreign direct investment (FDI) into the Czech Republic in the first quarter of 1998 totalled $227 million, $76.7 million less than the year before. Sedlar said that this year's volume of FDI will be lower than last year's, and is projected to be around one billion dollars against last year's $1.3 billion. Investors are being put off by the unclear political situation. However, Sedlar believes that a clear signal from the future cabinet about its approach to foreign capital could result in them returning.

Hungary: in a joint venture with General Motors Corporation (GM), the Suzuki Motor Corporation is to spend $212 million in doubling capacity at its plants in Hungary and Poland, to produce a new small car for the European market. The cars are to be constructed at Suzuki's plant in Esztergom, Hungary, and GM's Adam Opel AG plant in Gliwice, Poland.

Lithuania: the Lithuanian Department of Statistics reported that FDI in Lithuania totalled 4.163 billion litas ($1.1 billion) on 1 January 1998. The largest investment went to processing industries (38 per cent), trade (31 per cent) and to the telecommunications sector (7.4 per cent). The major investors came from the US (26 per cent of total investments), Sweden (12.4 per cent), Germany (11.2 per cent), the United Kingdom (7.8 per cent), and Denmark (6.2 per cent).

Poland: some 11.5 million ECUs, or 46 million zlotys ($13.5 million), in Phare assistance funds will be channelled into rural development in the Malopolska region. The money will be used to create new jobs in several rural areas of south-east Poland, which should help to cut unemployment and raise living standards, said Stanislaw Homa, Head of the Provincial Agriculture Office in Rzeszow.

Czech Republic: the construction company, Metrostav, reported a profit of 38.6 million crowns ($1.2 million) for the first four months of this year. This was 6.8 million crowns more than in the same period of 1997. The company expects a net profit of 156.6 million crowns on revenues of 6.2 billion crowns in 1998, said the company's Financial Director, Zdenek Snovsky.

The textile company, Slezan Frydek-Mistek, had a 16.759 million crown ($0.514 million) profit for 1997 on sales of 1.701 billion crowns, confirmed the company's Economic Director, Milan Mrnustik.

Following a decision by its sole shareholder, Komercni Pojistovna (KP), a part of Komercni Banka's financial group, decided to raise its share capital by 150 million crowns to 300 million crowns ($9.2 million). KP would like to use the new capital for the development of new operations.

Following a takeover of five stores from the Pronto Plus supermarket chain, the food retailer, Julius Meinl, became the second largest store in the Czech Republic. Julius Meinl has 95 supermarkets in the Czech Republic, employing 3,500 people with revenues of seven billion crowns ($214.7 million).

On 26 May, Ales Mokren, the company spokesman of Synthesia, one of the largest Czech chemical companies, reported a loss of 1.26 billion crowns ($38.6 million) in 1997, compared to a net profit of 5.8 million crowns in 1996. He also said that the loss was due to provisioning and creating reserves. Synthesia is likely to play a key role in the newly established Aliachem firm, which by the end of this year will comprise all the chemical firms controlled by Chemapol. The companies set to merge with Synthesia are Fatra, Technoplast, FSG Zlin and Moravske Chemicke Zavody. The company shares have been trading on the Prague Stock Exchange over the past month at 133-160 crowns ($4.08-4.90). The latest price was 155 crowns.

Last year, Unipetrol, the state owned petrochemical company, posted a consolidated profit of 1.1 billion crowns ($33.7 million). Ceska Rafinerska, which made a net profit of 2.078 billion crowns ($63.74 million), mainly contributed to Unipetrol's result. The company reported a net profit of 3.6 billion crowns in the first quarter of 1998. The profit is a consolidated result for all the company's subsidiaries, Chemopetrol, Kaucuk, Ceska Rafinerska, Benzina and others.

Estonia: at an extraordinary general meeting, shareholders of Estonia's Uhispank and Tallinna Pank approved a merger plan for the two banks. The plan is awaiting approval by the Bank of Estonia. Under a merger agreement signed on 22 April, Tallinna Pank will have three seats on the new bank's 12 member council. Meanwhile, its current shareholders will get 0.42 shares in Uhispank for each share in Tallinna Pank.

The Board of Directors of Estonia's ASA Kindlustus insurance company has proposed to expand share capital by nearly three million kroons ($0.2 million) in a bonus issue, said Director General, Sergei Nechajev. The stock capital will be increased from last year's profit fund to 35.34 million kroons from the present 32.39 million kroons. The company would issue one new share for every 11 existing shares, or a total of 294,500 new shares with a face value of ten kroons.

Hungary: on 27 May, the shareholders of Matra Eromu Rt., an energy supply company, decided to re-invest a 2.912 billion forint ($13.9 million) post-tax profit for 1997 back into its profit reserves. It also approved a plan for development, including the construction of a new coal fired power station and refurbishment of three existing generators at a total cost of 345 billion forints.

Latvia: Unibanka, one of Latvia's largest commercial banks, quoted on the Riga Stock Exchange, as well as on the Berlin and London Stock Exchanges, will open a representative office in Estonia. It is also awaiting permission from Russia's central bank to open an office in Moscow.

Poland: Telbank SA, the telecommunications operator, reported 7.4 million zlotys (two million dollars) in net profit in 1997, an increase on the previous year. Company income totalled 71.5 million zlotys, up 50 per cent from 1996. The shareholders of Telbank are the NBP, which holds a 59.4 per cent stake in the company, and 19 other Polish banks, along with the Union of Polish Banks.

John Kill, General Director of the Ford owned US company, Visteon Automotive Systems, confirmed that the company has bought two car parts makers from POL-MOT Holding. Kill said that business plans for the two plants are being drafted. After they are implemented, the companies will work at full production capacity.

On 26 May, Marek Baran, spokesman for the insurer, said that TU Allianz BGZ Polska reported a 1997 loss of 16.2 million zlotys ($4.7 million). Baran added that over 14 million zlotys had to be spent on compensation resulting from the 1997 bankruptcy of the Feniks Insurance Association.

During their general meeting on 27 May, the shareholders of Srodkowo-Zachodnie Telefony Polskie SA telecommunications company decided to raise its capital by 28 million zlotys ($8.2 million) to 31 million zlotys. The Konin-based firm (central Poland) is owned by the Chief Technical Organisation, NOT, and Poland Telecom Operators NV.

Russia: on 27 May, two large Russian companies, Lukoil, the oil giant, and Oneximbank, agreed to develop a joint strategy in order to defend their political interests. Both companies said that they will co-operate in financial services and oil, but will act separately in other issues.

Bulgaria: Bulgaria is expected to launch its inaugural $250-$300 million Eurobond, with a five year maturity. The issue planned for autumn last year was postponed because of the Asian crisis. JP Morgan and Merrill Lynch will act as advisers to the issue.

Czech Republic: on 25 May, the Prague Stock Exchange started operating the new SPAD direct feed trading system, with a trading of shares of Komercni Banka. Trading turnover was 7.076 million crowns ($0.217 million), said BCPP's Zdenek Frinta. The opening price for KB shares was set at 1,008 crowns on the basis of their quotations. Trading in the open phase closed at 1,007 crowns. Unipetrol shares will start trading on SPAD on 28 May, while SPT Telecom and CEZ shares will be added on 4 June.

Ceske Radiokomunikace, a telecommunications operator, is planning to raise 4.3 billion crowns ($131.9 million) through a global issue of 100 crown shares and global depository receipts (GDRs), said Chief Executive Officer (CEO), Miroslav Curin. He told a press conference that the price of the shares was fixed on the basis of international demand.

Lithuania: Ruta Skiriene, Deputy Head of the International Department of the Ministry of Finance, said that Lithuania's new Eurobond emission will be emitted in Euros. The volume of the new emission, which was initially planned at 300 Deutsche Marks (DM), will be increased to about 94 million DM ($157 million).The emission will be jointly managed by CS First Boston and Dresdner Bank AG. The funds received from the emission will be used for Government financing, mainly covering the budget deficit and re-financing of old loans.

Poland: PeKaO SA Bank plans to sell a new share issue to the European Bank for Reconstruction and Development (EBRD), after the public offer starting next month is completed, said the Bank's President, Maria Wisniewska. The EBRD will buy $100 million worth of PeKaO shares this year.

The Dutch beer company, Heineken NV, increased its stake in the Polish brewer, Zywiec SA, to 75 per cent. In a statement on 26 May, Heineken said that buying shares at $100.9 per share was worth a total of 259 million zlotys.

Deputy Treasury Minister, Alicja Kornasiewicz, said that between 15-19 June, 20,647,500 shares of the PKO SA Bank, priced between 35 and 45 zlotys ($10.2-$13.1), will be sold in tranches for large-scale investors, smaller buyers and corporations.

According to Plock company President, Konrad Jaskola, shares of an oil concern comprising Poland's biggest oil refinery, Petrochemia Plock SA, and biggest fuels distributor, CPN, should be quoted on the Warsaw Stock Exchange (WSE) in the first quarter of 1999. Under the Government prepared programme of privatisation of Poland's oil sector, 30 per cent of the merger shares will be floated both on the Warsaw bourse and as GDRs on the London Stock Exchange.

Russia: Russia&39;s stock market fell by 15 per cent, with investors appearing to lose confidence and abandoning the high risk market. The Moscow stock market plunged following worries about Russia's financial position and fears of rouble devaluation.

Slovakia: the Government announced three new issues of Eurobonds. These included a 600 million DM, five year yielding issue, at 350 basis points over Bunds; a 15 billion yen three year bond; a $300 million, five year bond yielding 370 basis points over the US treasuries.

Kazakhstan: the Prime Minister, Nurlan Balgimbayev, confirmed that the Government will proceed with its plans to sell part of its share in two blue chip oil companies, Mangistaumunaigas and Aktiubemunaigas, later this year. However, he said that the size of the Government stakes to be sold would depend on the revenue requirements of the Government. This year the Government expects to raise 45 billion tenge ($585.9 million) in privatisation revenues, 20 per cent of the budget.

Latvia: the Latvian Privatisation Agency confirmed that the public offering of shares in Latvijas Gaze, a gas utility, will begin on 29 June. According to the rules confirmed by the privatisation agency, 15 per cent, or 5.4 million shares in the gas supplier, will be publicly sold for privatisation vouchers at the minimum price of 2.5 lats ($4.16). Ten per cent or 3.6 million shares will be sold for vouchers to employees of the company, and five per cent or 1.8 million shares will be reserved for a revitalisation programme of Krajbanka. Latvijas Gaze has a share capital of 36 million lats; 16.25 per cent of the company is by owned by the Russian Gazprom concern and a German consortium, including the companies Ruhrgas and Preussen Elektra.

Lithuania: the Privatisation Commission announced that by mid-December this year, the Lithuanian Government plans to privatise fuel retailer, Lietuvos Kuras, which accounts for about 22 per cent of the local petroleum market. On 25 May the Commission approved a contract with the Lietuvos Kuras privatisation adviser, Vilfima consulting company, which will be assisted by Austria's Creditanstalt Investment Bank, Price Waterhouse, Regija law firm, whose partner is Watson, Farley & Williams, and the Artva environmental research company. The state owns 70.7 per cent of the company.

The Lithuanian Government decided to privatise Taupomasis Bankas by selling its 81.2 per cent stake to a strategic investor, said the Finance Minister, Algirdas Semeta. He continued that the potential investor will have to have a long-term credit rating of at least A, according to the Standard and Poor's rating scale. The privatisation of the Taupomasis Bankas should be concluded by the end of 1999, or the beginning of 2000. Taupomasis Bankas earned an audited net profit of 5.2 million lits in 1997. The Bank, which has a share capital of 82.3 million litas ($20.6 million), has announced a new 120 million litas emission.

Poland: on 26 May, the Cabinet approved the direct privatisation of the state agricultural equipment trading company, Agroma. The Government said that the privatisation will help the company to obtain enough capital to implement its investment and marketing programmes, strengthen its position on the market, provide access to foreign markets and maintain employment at an unchanged level.

Czech Republic:the Czech-Slovak border agreement on non-paying customs fees or taxes on the repatriation of household goods took effect on 22 May, confirmed Jiri Hajek of the Czech Interior Ministry. The agreement also defines the conditions for tourism in the two countries' border region.

Hungary: the opposition, Fidesz-Hungarian Civic Party, has gained a total of 148 seats with 99.76 per cent of the votes counted, defeating the governing Socialist Party of Premier, Gyula Horn. They only gained 134 seats following the second round of the general election on 31 May. Fidesz is expected to form a coalition government with the Smallholders Party and the Democratic Forum, which gained 48 and 17 seats respectively. A coalition of these three parties would have 213 seats in the 386 seat Parliament.

Poland: the Polish President, Aleksander Kwasniewski, held a two day summit with the President of the Ukraine, Leonid Kuchma. During this meeting they reached an agreement concerning the extension of a 20 million ECU loan to the Ukraine for joint Polish-Ukrainian economic co-operation. The President of Lithuania, Valdas Adamkus, was a guest at the summit. 'The meeting of the Presidents of Poland, Ukraine and Lithuania proves that Poland plays a significant role in regional co-operation, which is its driving force', said Kwasniewski.

Russia: Boris Yeltsin is under pressure as a miners' protest about unpaid wages, which started across the country two weeks ago, spread to southern and far eastern Russia, where doctors, teachers and pensioners have joined the demonstrations. The Government is not directly responsible for the payment of miners' wages, since most mines have been privatised, but the mines are owed large debts by Government-run enterprises and electricity companies. On 20 May the striking miners blocked the Trans-Siberian railway, cutting the last transport routes to Siberia.

Exchange rates (17 April)

Rates derive from the FT as of 29 May 1998.
Rates for Georgia, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan provided by the National Banks of each country