News round-up  13 - 31 July 1998


Azerbaijan: Azerbaijan President, Heydar Aliyev, rejected the proposals from British Petroleum and Statoil, the Norwegian state oil company which offered to build an oil pipeline from Baku in Azerbaijan to Ceyhan in Turkey. Aliyev said that 12 members of the Azerbaijan International Operating Company, the international consortium developing the first foreign oil project in the country's Caspian Sea sector, should participate in a main export pipeline.

Czech Republic: the amendment to the Banking Act, which will allow foreign investors to acquire up to ten per cent of shares in Czech banks without the Czech National Bank's permission, will take effect from 1 September.

On 23 July, Pavel Merlik, Deputy Prime Minister for the Economy, announced the Government's plans to submit proposals to Parliament which will alter the structure of taxation. The changes include cutting corporation tax from the current 35 per cent to about 20 per cent, and raising social insurance contributions and consumer tax. They are aimed to make the country more attractive for foreign direct investment.

Jaroslav Kaplan, Ceska Sporitelna's Chief Executive Officer (CEO), said that as a result of a new central bank rule, this year the bank could show a loss of three billion crowns. This is despite a raise in its first half income by 85 per cent (year-on-year basis) to 1.17 billion crowns (US$34.4 million).The central bank now requires banks to boost provisions for loans secured by real estate, instead of waiting with provisions until the end of the year.

The new Prime Minister, Milos Zeman, has underlined the priorities of his Government in the fight against economic crime, transparency of the capital markets, increasing economic growth and transparency in ownership relations. He also said that quickening the process of bringing Czech law into harmony with European Union (EU) legislation, and the passing of 20 bills on higher self-governing units, would be the main goal of his administration.

According to the Ministry of Finance, public budgets will probably end this year with a deficit of 38.6 billion crowns ($1.2 billion), or 2.1 per cent of Gross Domestic Product (GDP). The Maastricht criteria for entry into the EU specifies that the deficit in public finances should not exceed three per cent of GDP.

After assuming his post on 23 July, the new Czech Finance Minister, Ivo Svoboda, said he would like to see a balanced budget. However, he is aware that in the current situation he is only able to maintain a 'sober' budget.

Estonia: Ishan Kapur, Head of the International Monetary Fund (IMF) mission which examined Estonia's economic situation, said that despite some media reports of an economic decline, the IMF is satisfied with the country'progress. Although the pace of the country's GDP growth has slowed from 12 per cent last year to six to eight per cent this year, a six per cent rise is a very good indicator in terms of international standards. The IMF also examined the Government's budget policy and the recent collapse of Maapank.

Hungary: unemployment in Hungary dropped by 0.7 percentage points to a total of eight per cent during the second quarter. This was well below the April EU average of 10.2 per cent.

Latvia: Latvia's industrial output increased 9.9 per cent in the first half of the year, as compared to the same period of 1997. Latvia reported a 17.3 per cent increase in mining and 13.5 per cent in the processing industry, whereas the production of electrical energy and supply of natural gas and water declined by 4.2 per cent.

Lithuania: the 1994-1997 Lithuanian-IMF co-operation programme expired last autumn. In keeping with the programme, the IMF issued Lithuania with about $200 million of loans. To date, Lithuania has signed no new agreement with the IMF.

The Lithuanian Prime Minister, Gediminas Vagnorius, estimates that the country's GDP rose by about eight per cent and industrial output by five to six per cent in the first half of this year. The Prime Minister forecast that economic growth will accelerate faster this year compared to 1997.

Vagnorius has forecast that inflation in July will be 0.2 per cent month-on-month, and less than six per cent year-on-year. The year-on-year inflation in Lithuania stood at six per cent in June. Foreign capital investments are expected to double this year after they increased by 2.5 fold over the past two years.

Poland: the Government said Poland's gross domestic profit in 1999 will grow by 6.1 per cent; year-on-year inflation will be 8.5 per cent; and December 1998-December 1999 inflation will be brought down to 8.1 per cent from this year's forecast of 9.5 per cent. Next year's budget deficit has been set at 1.82 per cent or 11.4 billion zlotys ($3.3 billion). Next year's GDP is valued at 606.7 billion zlotys, budget incomes will amount to over 146 billion zlotys and budget spending to over 157 billion zlotys.

According to Transport Minister, Eugeniusz Morawski, Poland will have to spend over 30 billion zlotys ($8.7billion) on transport infrastructure by the year 2001. He added that 7.5 billion zlotys per year, including 4.5 billion from the State budget, will have to be allocated for the development of the infrastructure under the Ministry prepared plan. This year's budget spending amounts to 582 million zlotys.

The National Bank of Poland (NBP) announced that Poland's money supply in the first ten days of July rose by 1.6 per cent or 3,095.1 million zlotys ($900.4 million), to 195,294.3 million zlotys. NBP added that money supply grew by 10.7 per cent or 18,857.3 million zlotys from 31 December 1997 to 10 July 1998.

Ukraine: Stanley Fisher, Deputy Managing Director of the IMF, said that the IMF needs Government approval for the revised 1998 Ukraine budget. This is to facilitate a $2-2.5 billion, three-year loan, necessary to save Ukraine from default or devaluation.


Estonia: the Finnish automatic appliances producer Enerpoint Oy wants to build a plant at an estimated cost of 13 million kroons in Estonia's second largest city, Tartu. Enerpoint plans to invest around five million Finnish markkas in Tartu, half of which will be spent on equipment.

Hungary: Nokia, a mobile phone manufacturer, is planning to invest some $182 million over the next four years in building a manufacturing and distribution centre in Hungary. The centre is expected to start operations at the end of 1999.

Latvia: the Norwegian Varner Hakon Invest, VHI, real estate development company has invested about $23 million in the reconstruction of the Riga Centre department store. The company's other major projects in Latvia include hotels Latvija and Jurmala, the Riga Central Railway Terminal and the Europe Centre.

Lithuania: Filana, a 100 per cent subsidiary of the French company, Chargeus, has opened a new wool spinning mill in Lithuania's city, Kaunas. The factory will produce woollen yarn for suits to be sewn in France, England and Germany. Filana has already invested 39 million French francs ($6.6 million) in the new plant.

The United States (US) concern, Master Foods, will invest about 40 million lits in a new plant to be built in Lithuania's western city of Gargzdai. Master Foods has already invested 28 million lits in Lithuania. Its turnover in the country is expected to reach 82.8 million lits this year.

Poland: Volkswagen Motor Polska (VWMP) and Sitech, 49 per cent of which is owned by Volkswagen AG, plan to invest $190 million in a diesel engine plant and a car seat making factory in Polkowice. This is VW's second biggest investment in Poland. The plant will be located in the Legnica Special Economic Zone on the land bought from the zone. VW plan to start production of diesel engines for all Volkswagen models, Skodas, Audis and Seats by the middle of 1999 at the latest. The factories are expected to achieve full production capacity in the year 2000.

British Steel (BS) the world's fourth largest steel producer with 17 per cent of the global market, wants to become a strategic investor in the Katowice steel mill. John McDowall, a member of BS Board, said that the British concern wants to buy a 85 per cent stake, with the remaining 15 per cent going to the workforce.

Motorola Inc and Krakow authorities signed an agreement giving the US concern the right to use 7.3 hectares of land in Krakow's special economic zone in Pychowice. The US company pledged to invest $110 million in a software plant that will make software systems for wireless telecommunications devices, and a semi-conductor plant that will produce integrated circuits for mobile telephones and computers.

According to Daniel Zbytek of the State Agency for Foreign Investment (PAIZ), some $4 billion, including $1 billion in the first half of 1998, has been invested in Poland's car-making industry. He said that it is possible that foreign investment in the sector will grow by another $1 billion in the second half of the year, bringing the total investment value to around $5 billion from mid-1989. In 1997, investment in the car industry was valued at $2.5 billion, with Italy's Fiat investing $1.142 billion and pledging to spend $815 million, and South Korea's Daewoo investing $1.11 billion and pledging another $567 million. Of companies producing car components, the French tyre-maker, Michelin, spent $136 million with a financial committment of over $151 million. Meanwhile, the US tyre-making company, Goodyear, spent $112 million and pledged to spend another $55 million, and Japan's Isuzu invested $36 million and pledged to spend $160 million.

Poland seeks 15 million and three million European Currency Units (ECUs) for two projects worth 68.5 million and 36.5 million ECUs, respectively, and which provide for the improvement of sewage management. Fifteen million ECUs is also required for a 150 million ECU proposal to modernise a railway line destroyed during last year's flood. It was annouced that the European Investment Bank (EIB) is to lend a total of 280 million ECUs to Poland for financing two other major motorway projects. The sum of 150 million ECUs is for upgrading 25 km of the A4 motorway in the Katowice region of southern Poland, part of the high priority Trans-European motorway Berlin-Kiev. Another 130 million ECUs is for building a 13.3km bypass on the A2 motorway around the city of Poznan in western Poland, as part of the Trans-European Corridor II from Berlin to Moscow.

The British BOC Distribution Services is planning to invest $7 million during the next five years in a distribution centre which has been opened at the Diamond Business Park in Raszyn, outside Warsaw. The 10,000 square metre centre is one of the most modern storage facilities in Poland. The British firm employs 70 people in Poland and has its centres in Raszyn, Katowice, Poznan and Lodz. The BOC Group has invested $130 million in Poland in gas distribution centres among other things. BOC plans to build new centres in the northern and southern regions of Poland.


Czech Republic: following the sale of the healthy part of Agrobanka Prague (AGB) to GE Capital Bank, the Czech central bank has started proceedings to withdraw AGB's licence.

Vychodoceska energetika (VCE), the East Bohemian power distributor, reported a first half gross profit of 290 million crowns ($9.2 million), up 15 per cent from 253 million crowns in 1997. VCE projects a net profit of 263 million crowns for 1998. Forty-eight per cent of the company is owned by the Property fund, and 34 per cent by municipalities in eastern Bohemia. Elektrarny Opatovice and the Swedish power company Vattenfall AB each holds seven per cent. VCE's share capital totals 2.5 billion crowns.

Union banka (UB) recorded a loss of 347.362 million crowns ($11.02 million) in 1997, against the 461.421 million crowns it lost in 1996. Last year's loss was due to UB's capital investments in Bankovni dum Skala, Evrobanka and Ekoagrobanka, all of which were in crisis and some of which were under forced administration by the central bank.

Estonia: AS Eesti Energia, the national energy company, has issued 40 million kroons ($2.8 million) worth of three-month bonds, which bear an interest of 11.5 per cent. The bond issue was arranged by Hansapank. A total of 17 bids amounting to 72 million kroons had been submitted in the auction.

The international credit rating agency, Moody's Investor Service, has lowered Hansapank's long-term deposit rating from Baa2 to Baa3. According to Moody's, Hansapank's post-merger ratings were lowered to reflect the fact that Hoiupank was a weaker bank. Hoiupank suffered a loss of 225 million kroons following an irregular transaction connected with the bank's share issue in October 1997. Moody's rating change also reflects the volatile market conditions in Estonia, which continue to place pressure on treasury profits for the whole banking sector. It also raises concerns related to the development of asset quality, given the rapid loan growth experienced during 1996 and 1997.

Moody's Investor Service granted Estonia's Uhispank a long and short-term foreign currency deposit rating of Baa3/P-3 and a financial strength rating of D. The ratings reflect Uhispank's strong position as the second largest banking group in Estonia and the Baltic states.

Hansa Capital, a subsidiary of Estonia's Hansapank, earned 101.3 million kroons ($7.08 million) in net profit in the first half year. Its total assets stood at 4.93 billion kroons at the end of June. Hansa Capital Group's estimated post-merger market share in leasing in the Baltic countries is 52 per cent, 62 per cent in Estonia, 40 per cent in Latvia and 38 per cent in Lithuania.

Hungary: Graphisoft NV, a software maker, reported that its profits doubled in the first half of this year, due to an increase in sales in North American and European markets. The company, which provides design software for architects and builders, sold 2.3 million shares at 40 Deutsche Marks each in its first public offering last month.

Moody's upgraded its rating for Budapest Bank (BB), Kereskedelmi es Hitel Bank, (K+H), Magyar Kulkereskedelmi Bank (MKB) and Orszagos Takarekpenztar es Kereskeldelmi Bank (OTP). The banks BB, MKB, and OTP had long-term deposits of Ba1; these are now rated Baa2. K+H's long-term deposit was upgraded from Ba2 to Baa2. All four banks' short-term deposits were Not Prime, but they are now rated Prime-2. Moody's said the future for long-term foreign currency deposit ratings is positive, and that all four banks have made considerable improvements in their management structure and financial services.

Egis Rt, the pharmaceuticals company, signed a five-year $50 million contract with company Merck and Co Inc to supply chemical agents to the US firm Under the terms of the contract, Egis Rt will be the exclusive supplier of methyldopa. This was a chemical agent discovered by Merck and used by them since 1962 in Aldomet, a drug used to treat patients with cardiovascular problems. Last year Egis Rt posted a net profit of 5.65 billion forints.

Eighty-seven per cent of the beverage distribution company, Brauhaus Amberg AG, has been sold to Deutsche Balaton Broker Holding AG, which specialises in investing in other brokerage firms. Having recently come out of bankruptcy, Brauhaus will change its name to net. IPO AG and become an online brokerage business. It is planning to increase its capital to 25 million Deutsche Marks ($14 million).

Latvia: the Latvian Baltijas Tranzitu Banka (BTB) is negotiating a possible merger with four other banks as part of the bank's consolidation process. This is to increase their capital to the required five million ECU by the year 2000. BTB's profit in the first six months of 1998 was 1.6 million lats ($2.6 million), while its profit target for the period was 1.4 million lats. In late June, BTB was ranked seventh among Latvia's commercial banks in terms of assets.

Latvian Unibanka expressed its interest to purchase 70 per cent of shares in insurance brokerage company SIA KRG. The company will be renamed as Apdrosinasanas Brokeru Sabiedriba Unipolise, InsuranceBrokerage Unipolise. The bank will buy shares in KRG after the insurance brokerage raises its share capital. Unibanka has its shares quoted on the official list of the Riga Stock Exchange (RSE), as well as on the Berlin and London Stock Exchanges.

Latvia's Trasta Komercbanka (TKB), Parex Banka's insurance arm Parex Apdrosinasanas Kompanija and TKB Asset Management, established an investment company TKB Investiciju Kompanija. According to the Head of TKB's Securities Section, Roberts Idelsons, the new company was established to manage investment and pension funds.

Latvia's leasing companies, Hanza Lizings and LZB Lizings, signed a merger agreement on 23 July. Hanza Lizings is owned by the Hansapank group, while Hoiupank holds the majority interest in Latvijas Zemes Banka. LZB Lizings covers three to four per cent of the Latvian leasing market, and like Hanza Lizings, mainly offers car leasing services.

Poland: Volkswagen Bank Polska, owned by Volkswagen Bank GmbH, will inaugurate its operations on 30 July. The bank will offer credits for buying cars to private customers as well as to firms, and provide financial services to Volkswagen, Audi and Skoda dealers. Volkswagen Bank GmbH is part of the Volkswagen Financial Services, the financial arm of Volkswagen AG.

Stocznia Gdynia SA (shipyard) pledged to invest from $80 to $100 million by 2010 in the modernisation of the bankrupt Gdansk yard. Stocznia Gdanska SA will be sold to a consortium of Stocznia Gdynia SA and the Warsaw-based Evip Progress SA.

On 23 July, Invest-Bank SA shareholders decided to raise the bank share capital by 35 million zlotys, some $10.2 million, to 175 million zlotys, said Antoni Pawela, Director of the bank's Marketing Department. The capital raising operation will be carried out through a new share issue. Meanwhile, the bank's shareholders have postponed a merger with Bank Staropolski SA until 31 October 1998. Pawela added that the merger and another 30 million zloty share issue will increase the bank's funds to over 200 million zlotys.

The VII Kazimierz Wielki National Investment Fund (NFI) will provide 20 million zlotys, some $5.8 million, for the restructuring and modernisation of the porcelain and semi-vitrous chinaware-maker Chodziez SA from of Pila province. Chodziez SA sales in the first half of 1998 reached nearly 20 million zlotys, pre-tax profit went to 865,000 zlotys and net profit grew to 591,000 zlotys.

One of Poland's biggest private telephone operators, Cuprum 2000, has reported a net profit of 440,000 zlotys, ($127,000) in the first half of the year. Since June, Cuprum 2000 has been owned by another local phone operator, Telefonia Lokalna. The merger will allow the company to pursue a joint economic policy against chief rival Telekomunikacja Polska SA.


Estonia: on 27 July, an extraordinary meeting of Estonia's Forekspank shareholders approved the board's proposal for a closed issue of shares and waived the pre-emptive right to purchase new stock. By the shareholders' decision, the selling price of the new shares will be set at the average closing price of the share over the preceding ten trading days.

Hungary: Thomson Financial Services has made an equity investment in Focus Investment Rating Company, Budapest. This will become an affiliate of Thompson Bank Watch Inc, said Jozsef Rotyis, the company CEO and former CEO of the Budapest Stock Exchange.

Latvia: the BTB bank has recently been assessed by the international rating agency, Thomson BankWatch, and been given a credit rating for short-term foreign currency denominated debts of LC-2, while for long-term debts it is BB. Thomson BankWatch noted that BTB is an intermediate size bank in terms of assets, but has a well-developed network of branches. The bank#39;s shareholders are foreign companies, with the largest share held by Kuwait-based finance and investment conglomerate, KIPCO Group.

Thomson BankWatch has also assigned credit ratings of BB and LC-2 to Rigas Komercbanka, BB+ and LC-2 to Parex Banka, and BB+ and LC-2 to Rietumu Banka. On its own initiative the agency has calculated an LC-1 credit rating for Latvian Unibanka for short-term national currency denominated debts.

Viesturus Neimanis, Latvijas Unibanka's Vice-President, said that the bank's intermediate-term Eurobonds programme will be drawn up in three to four months' time. The programme will be organised by the Deutsche Bank and its volume will be $400 million. Deutsche Bank has also been appointed the leading bank for the first issue of bonds within the programme, which is aimed at expanding the bank's Baltic operations.

According to RSE statistics, Latvia's Trasta Komercbanka was the most active member of the RSE in the second quarter of this year. Trasta Komercbanka accounted for 19.54 per cent of total turnover, Parex Banka 13.71 per cent, Latvijas Unibanka for 11.92 per cent and Hansabank Latvija for 9.23 per cent. In the first quarter of this year the leading RSE member was Unibanka, with 15.81 per cent of the total turnover, while Trasta Komercbanka ranked third with 11.03 per cent. The total turnover of securities in the second quarter of this year was 15.507 million lats, up by 11.8 per cent over the first three months of the year, when the RSE turnover was 13.868 million lats.

Lithuania: Lithuania's Bankas Hermis will receive a $10 million syndicated loan from five foreign banks, according to an agreement signed on 24 July. The loan was granted to Hermis for an 18-month period with an interest of LIBOR + 0.40 per cent. It was managed by the Austrian RZB Bank, which contributed $4 million. Meanwhile, three German banks, the DG Bank, the Landesbank Rheinland-Pfalz Girozentrale and the GZB Bank contributed $2 million, $2 million and $1 million, respectively, and Bank Austria AG provided $1 million. European banks have provided Hermis with four loans totalling $66 million.

Lithuania's Securities Commission registered a new 38.092 million lits shares emission by the Klaipeda-based Naftos Terminalas oil terminal, which will increase the company's share capital from 131.63 to 169.7 million lits ($49.9 million), and increase the state controlled stake in the terminal from 66.68 to 74 per cent. The state will also regain its veto right in the Klaipedos Nafta holding company, since the Government's stake in this latter firm will increase from 31 to 34 per cent. Klaipedos Nafta controls 46 per cent of Naftos Terminalas.

Lithuania's Securities Commission registered a new stock emission by the national air carrier, Lithuanian Airlines (LAL). LAL will be issuing a 17.68 million lits stock emission, divided into 176,821 common shares with a face value of 100 lits. LAL's share capital, 100 per cent of which is controlled by the state, will be upped to 104.1 million lits out of government subsidies. LAL has been included on the list of strategic enterprises to be privatised. The Ministry of Transportation has proposed that 49 per cent of the national carrier be privatised in the first stage of the sell-off, with a controlling stock package in the company to be privatised later.

A total of 286.5 million lits ($84.3 million) of Lithuanian Treasury bills were sold at six Bank of Lithuania auctions in June. Demand for Treasury bills was satisfied to 52 per cent, with three and six-month securities prevailing. According to the central bank, the average annual yield on six-month Treasury bills dropped from 10.86 to 10.08 per cent over the month, while the yield on three-month Treasury bills was down from 10.23 to 9.60 per cent.

A $75 million syndicated bridge loan facility for Lithuania's AB Butinges Nafta was signed on 23 July 1998 in Vilnius. The facility was jointly arranged by Lithuania's Bankas Hermis, Raiffeisen Zentralbank Osterreich AG (RZB-Austria) and Bankgesellschaft Berlin AG. This is the tenth syndicated loan arranged by RZB in Central and Eastern Europe this year.

AB Butinges Nafta is a joint stock company founded in 1995. The main shareholders are currently government entities and Preussag Wasser und Rohrtechnik, Germany, who hold a 21 per cent stake.


Bulgaria: a second wave of a mass privatisation programme began in Bulgaria on 27 July. The new privatisation vouchers, with a value of $140, will be handed to three million Bulgarians who will become shareholders in assets worth $3billion.

Czech Republic: Ivo Svoboda, the Finance Minister of the new Government, confirmed that the privatisation of partially state-owned banks was one of the main tasks for his ministry. However, he added that it would take some time, because of the complicated structure of some of the banks (depending on whether the bank is a part of the financial group, has a high or low amount of private deposits, etc).

The International Financial Corporation (IFC), a financial arm of The World Bank, confirmed its participation in the privatisation of CSOB. Miroslav Zamecnik of CSOB said that the IFC may invest $75 million in the purchase of the bank&39;s stock or raising of its share capital, but its stake may be a maximum of ten per cent.

Lithuania: the Lithuanian Economy Minister, Vincas Babilius, and President of the US corporation, Williams International, John C Bumgarner, signed a letter of intent to buy 33 per cent stakes in Lithuania's three major oil companies, Mazeikiu Nafta oil refinery, Butinges Nafta oil terminal and Naftotiekis oil pipeline, which will be merged before the sell-off. Under the agreement, Williams International will invest $150 million in Lithuania's oil industry through the purchase of a new share emission, and a further $150 million is planned to be invested from the future profits. The investment will be used for the modernisation of the oil enterprises, which is to be completed within five years before being put up for further privatisation.

The Lithuanian Privatisation Commission has approved a privatisation programme for KLASCO, the Klaipeda-based shipping company. Five consortiums have submitted applications for the tender of KLASCO, which has a share capital of 128.99 million lits. The state is selling its entire 90 per cent stock package, while the remaining ten per cent of shares are in the hands of small shareholders.

The Lithuanian Finance Ministry announced the second stage of privatisation of the Zemes Ukio Bankas (LZUB). During the first stage of the bank's privatisation, four bids were received. Among the bidders were the second largest Lithuanian private bank, Bankas Hermis, the Scandinavian Merita Nordbanken, the Polish Bank Handlowy and a Latvian bank. The winner of the tender should be announced by 2 September. The Lithuanian state, which controls 87.4 per cent of LZUB's stock, wants to sell a controlling package of the bank's shares.

Russia: Pyotr Rodionov, Deputy Chair of Gazprom, announced that the company had recommended that the Government sell five per cent of its 40.87 stake at a cash auction, or to divide it into two and sell it to strategic investors. Royal Dutch/Shell and Italy's Eni have already agreed with Gazprom to invest $1billion each in bonds and convertible shares owned by a Gazprom affiliate.


Estonia: following the merger of Estonia's Hansapank and Hoiupank, the funds managed by Hoiupanga Fondid (Savings Bank Funds) will be transferred to Hansa Asset Management. Hoiupanga Rahaturufond (Hoiupank Money Market Fund) is already managed by Hansa Asset Management. Hoiupanga Fondid currently manages Hoiupanga Investeerimisfond (Hoiupank Investment Fund), Hoiupanga Venemaa Investeerimisfond (Hoiupank Russian Investment Fund), Suurerastamise Investeerimisfond (Big Privatisation Investment Fund) and Hoiupanga Rahaturufond. The funds' total assets stood at 190 million kroons as of 23 July.


Lithuania: the Presidents of Lithuania, Latvia, Estonia and Poland met during the closing ceremony of the military exercises Baltic Challenge '98, held in the Lithuanian port of Klaipeda on 25 July. The four presidents, Valdas Adamkus, Guntis Ulmanis, Lennart Meri and Aleksandr Kwasniweski said Baltic Challenge '98 was an important step in ensuring security in the Baltic region and Europe. The US and other countries participated in the programme.

Poland: Prime Minister, Jerzy Buzek, announced that he would lead the European Integration Committee (KIE) personally, taking control from Ryszard Czarnecki. During the meeting, the KIE debated the major issues connected with the EU entry, and adopted a draft of the National Programme for Membership Preparations (NPPC), with a timetable of measures adjusting the Polish law to EU norms and their implementation for the years 1998-2002.

Russia: a Russian parliamentary commission began gathering evidence to impeach President Boris Yeltsin, alleging he had ?betrayed the motherland÷. The commission accused Boris Yeltsin of five treacherous acts in destroying the Soviet Union, forcibly dissolving parliament in 1993, launching a war against Chechnya in 1994, undermining Russia's armed forces and impoverishing the nation. (FT 28/07/98)

Aslan Maskhadov, the Chechen leader, agreed to meet Sergei Kiriyenko, the Russian Prime Minister, to discuss the position of the Russian Government concerning its policy towards the region of Chechnya.


Exchange rates (31 July)

£ US$ D-Mark
Albania Lek 242.4 148.2 83.3
Armenia Dram 821.9 502.4 282.5
Azerbaijan Manat 6462.0 3950.0 2220.8
Belarus Rouble 121878.2 74500.0 41886.9
Bulgaria Lev 28961.1 1770.3 995.3
Croatia Kuna 10.6 6.5 3.6
Czech Republic Koruna 50.4 30.8 17.3
Estonia Kroon 23.3 14.2 8.0
Georgia Lari 2.2 1.3 0.8
Hungary Forint 353.3 215.9 121.4
Kazakhstan Tenge 127.0 77.6 43.6
Kyrgyzstan Som 33.0 20.1 11.6
Latvia Lats 0.9 0.6 0.3
Lithuania Litas 6.5 4.0 2.2
Macedonia Denar 90.8 55.5 31.2
Moldova Leu 7.8 4.8 2.7
Poland Zloty 5.6 3.4 1.9
Romania Leu 14310.5 8747.5 4918.2
Russia Rouble 10.3 6.3 3.5
Slovakia Koruna 56.8 34.7 19.5
Slovenia Tolar 273.9 167.5 94.2
Tajikistan Tajik rouble 1241.3 754.0 415.1
Turkmenistan Manat 6881.3 4166.0 2302.0
Ukraine Hryvna 3.5 2.1 1.2
Uzbekistan Soum 137.1 83.1 46.1
Yugoslavia New dinar 17.4 10.6 6.0

Rates derive from the FT as of 31 July 1998.
Rates for Georgia, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan provided by the National Banks of each country

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