Romania: Heavy rains in Romania caused flooding in several towns and villages of the county of Prahova, 160km north of Bucharest. No casualties were reported, but Romanian officials said that the rains damaged roads and disturbed railway traffic. This latest deluge follows the devastation wrought by floods in parts of the Czech Republic, Poland and Germany.

The Romanian Government has promised to cut military expenditure in line with a demand from the International Monetary Fund (IMF). The decision came as part of the annual Romanian budget, which was approved by the Government on 6 August. The budget aims to keep the deficit to 4.5 per cent of GDP to fulfil conditions agreed between the IMF and the Romanian Government for disbursement of the second US$86 million tranche of a $430 million standby loan agreed earlier this year.

Seventeen heavily indebted companies owned by the Romanian state are to be closed, announced Romanian Prime Minister Victor Ciorbea on 6 August. These steps have been taken following strong pressure from the IMF, who are pressing for major structural reforms to take place in the country.

Ukraine: Plans for an economic austerity programme were finalised on 6 August by Prime Minister Valery Pustovoypenko and the Ukrainian Central Bank. The programme is intended to fulfil one of the conditions set by the IMF for a $525 million loan that should be approved by the end of August.

Russia: The rouble will be devalued from 1 January, 1998, announced Russian President Boris Yeltsin on 4 August. The nominal value of the Russian rouble will be cut 1,000-fold, and the old 1,000 rouble banknote will be worth only one rouble. New banknotes and coins will enter circulation from 1 January, 1998, but old banknotes and coins will still be in circulation on a parallel basis throughout the whole of 1998.

Azerbaijan: Drilling in the Azeri sector of the Caspian sea has begun, confirmed James Tilley, President of the Caspian International Oil Company, an international consortium of oil companies. The first exploratory well in the Azeri sector of the Caspian Sea was drilled 125km east of Baku, the Azerbaijani capital.

Albania: Some 360 French soldiers and 116 military vehicles have left the Albanian port of Durres for France, the Albanian Interior Ministry has confirmed. The forces were a part of the 1,000-strong French contingent in the multinational force that was sent to Albania in April this year, before the general elections of 29 June.

Russia: Inkombank, the fourth largest Russian bank in terms of assets, has received a substantial international credit worth $115 million from a syndicate of foreign banks. The agreement on this, the fourth such credit in the last 12 months, was signed in Frankfurt am Main and is valid for a further 12 months. The syndicate is made up of banks from China, Japan, South Korea, Kuwait, Bahrain, Turkey, Cyprus, Greece and South Africa.

Russia and Turkmenistan have reached an agreement on the establishment of a joint venture gas company, according to Rem Vyakhirev, Chair of the Russian gas company Gazprom. The joint venture gas company will aim to sell gas to the CIS countries, and will boost gas production in Turkemenistan, already the fourth biggest gas producer in the world. According to estimates by the World Bank, Turkmenistan has 1.3 trillion cubic metres of gas reserves.

Lukoil, the Russian oil company, has reversed the decision to pull out of a joint project with Azerbaijan in the Caspian Sea reported last week. Development of the offshore Kyapaz oil field will now go ahead as planned, with Lukoil working alongside Socar, the Azerbaijan state oil company and Rosneft, the Russian state owned oil giant. The project had been threatend by Turkmenistan, which claims that the field, known in Turkmenistan as Serdar, belongs to them.

Russian banking group Oneximbank has acquired a 38 per cent stake in Russian nickel giant Norilsk Nickel. The auction of Norilsk had been postponed by Russian Prime Minister Victor Chernomyrdin, but the Government finally gave a green light for the Norilsk privatisation to go ahead.

Oneximbank has stated its interest in acquiring Rosneft, the last big Russian state owned oil company, which will be privatised later this year. The Rosneft privatisation is expected to bring more than $1 billion cash for the Russian Government. The company accounts for five per cent of the country's crude oil output. Oneximbank is at present one of the biggest Russian commercial banks with assets of Rbs 21,000 billion. The bank received a rating of Ba3 from the Moody's credit rating agency and issued a $200 million Eurobond in July this year.

Russia: The shares of the Russian giant gas company Gazprom went up by 16.7 per cent in the course of July, up from 3,470 roubles to 4,050 roubles per share.

Siberian oil company Sibneft, the fourth largest Russian oil company in terms of refining capacity, has become the first Russian corporation to enter the international bond markets, with a $125 million offering. Last week the company signed an agreement to clear $782 million in outstanding tax arrears, which enabled Sibneft to go ahead with their public offering. Sibneft has very large oil reserves totalling some four billion barrels.