Central & Eastern Europe: The International Monetary Fund (IMF) has confirmed the GDP growth forecast for the Russian economy as 1.5 per cent, and not the the 3 per cent predicted in the previous survey. The present survey was issued in Washington and Hong Kong in connection with the annual meeting of the IMF and the World Bank that opened in Hong Kong on Wednesday 17 September. The IMF survey projected that the global economy will grow by 4.1 per cent throughout 1997, of which the US will account for a fifth. In the emerging-market countries of Central and Eastern Europe, the survey predicted that Poland and Croatia will achieve 5.5 per cent growth. The IMF also predicted a very high performance of 10 per cent for Georgia but a fall of 10 per cent in Albania`s GDP. Polish finance minister Marek Belka and Polish National Bank president Hanna Gronkiewicz-Waltz held talks with the World Bank and EBRD representatives, trying to encourage banking investors to invest in Poland. Both banks offered Poland up to US$300 million in aid for flood-affected areas.

Czech Republic: The Czech trade deficit narrowed in August to Kc8.82 billion (US$268 million). Exports in August went up by 26.4 per cent and amounted Kc 55.7 billion, mainly because of stronger demand from abroad and the Czech koruna's 10 per cent depreciation in May . Imports rose only 11.7 per cent to Kc 64.5 bn.

Hungary: The First Central and Eastern Europe Investors Protection Fund started operating in Hungary this week. The fund, Befekteto-Vedelmialap (BEVA) will protect investors if investment services companies fail to meet clients' claims. Iliona Hardy, the board's chair said that the fund will provide partial compensation up to Hft1 million. Ten banks and fifty-two brokerage houses and one co-operative saving bank have joined the fund already. Hardy also said that 80 per cent of fines levied by the stock exchange and financial watchdog APTF will also be available, as well as yields from BEVA's investments, which will be limited to state securities.

The Ministry of Trade, Industry and Tourism announced on 24 September that Hungary's trade deficit had increased to US$1.2 billion in July, from $1.1 billion in June, but was down from $1.3 billion on the same time last year.

The Central Statistical Office, in its monthly report, said that industrial output in the first seven months of 1997 rose 7.9 per cent from the same period in 1996.

David Levey, Managing Director and the co-head of the Moody's Sovereign Risk Unit told Reuters that the result of next year's elections in Hungary will not change the agency's positive medium-term outlook for Hungary, which at present is rated as Baa3. The Moody may upgrade this as the political scene is considered reasonably stable and economic results are satisfactory. Hungary is due to have new elections in May 1998.

Latvia: The IMF, who are monitoring the overall government budget, expressed satisfaction with the 1998 budget plans and is not worried about the possibility of a small deficit in 1997. Latvia has planned a balanced 1997 budget but is expected to end the year with a deficit of 12 million lats. The draft budget for 1998 submitted to the parliament for approval forecast a deficit of 35.8 million on 1.211 billion lats of expenditure and 1.248 billion lats of revenue. The next IMF standby agreement targets a small budget deficit of 0.5 per cent of GDP.

Lithuania: Prime Minister Gediminas Vagnorius said on 24 September that the Lithuanian government is aiming to reduce their budget deficit to 1.5 per cent of GDP for 1998 from the current 1.9 per cent. He also said that the country has kept to tight monetary policies and has reduced its borrowings on the international and domestic markets. The Lithuanian parliament is expected to approve the redistribution of 287 million litas (US$ 71 million) to finance social programmes like health insurance funds, education and to raise salaries for public sector employees. Vagnorius added that he did not consider the new agreement that Lithuania is due to negotiate with the IMF to be necessary.

Poland: The Central Statistical Office (GUS) reported a 7.2 per cent increase in GDP for the first eight months of this year compared with the same period last year. According to Professor Leszek Zienkowski, the Director of the Institute of Statistical and Economic Research, GDP for the whole of 1997 could exceed 6 per cent.

Poland's budget deficit this year should be lower than planned and will not exceed 8 billion zlotys (US$2.3 billion), 1.8 per cent of GDP and not the previously projected 2.8 per cent, said Piotr Dziewulski, head of the public debt department of the Ministry of Finance.

Poland's foreign trade deficit exceeded US$6.735 billion by the end of July, it was confirmed by the Polish National Bank and has doubled since last year. Exports grew by 8 per cent and reached $14.8 billion,while imports grew by 24 per cent to $21.5 billion.

Russia: The United Nations Development Programme intends to support a number of investment projects that have foreign participation in Russia. The deputy head of the UNDP Mission in Moscow, Alexander Avanesov explained in Moscow on 24 September that there are a few projects in preparation, one of which is the joint venture in the automotive industry in Vilogda, and another is an ecological project in Murmansk. The UNDP participated in the development of the transport system in Moscow, for which the Moscow government has allocated US$80,000. After the liberalisation of its capital markets, Russia has become one of the most important new markets for international investment. According to data from the Russian-Europe Centre of Economic Policy, it is expected that by the end of 1998 the inflow of foreign capital to Russia may amount to $14 billion through syndicated loans, Eurobonds and issuing of regional securities.

On 23 September, the co-chairmen of the Gore-Chernomyrdin intergovernmental commission signed a co-operation programme in Moscow to run to the year 2000. The document comprises three main areas: provision of mutual access to domestic markets; promotion of investment co-operation and assistance for Russian integratration into the world economy and international economic and financial organisations. The US governmental organisation, Overseas Private Investment Corporation, reported from Washington that OPIC will allocate additional insurance of US$50 million to the Moscow branch of Citibank to cover investment projects against political risks. It has also guaranteed $65 million for the US pharmaceutical company GD Searl, which is building a plant near Moscow.

Russia's Prime Minister Viktor Chernomyrdin and Egyptian President Hosni Mubarak signed an agreement in Moscow on 23 September covering the avoidance of dual taxation, sea transportation and an undertaking to co-operate legally in civil cases.

The Russian government is expected to sign five agreements with the World Bank on loans totalling US$284.6 million. They will be signed by the Russian ambassador to the US on behalf of Russia. Four of the loans are for a period of 17 years with a five-year grace period and the fifth is for 15 years with a six-year grace period. The loans will be used for several projects, including developing the health and educational services.

The Russian Ministry of Foreign Economic Relations and Trade said that exports for the first seven months of 1997 went down by 2.9 per cent to US$47.1 billion and imports shrunk by 4.2 per cent to $26.6 billion, bringing the overall trade balance to $73.7 billion, a decrease of 3.4 per cent. According to the ministry, the main reason for this decrease is the 9 per cent drop in exports to the non-CIS countries in the second quarter of 1997.

Yugoslavia: The Yugoslavian and Russian joint venture company, YugoRosGaz will build a new gas pipeline across southern Serbia linking Yugoslavia with the Bulgarian section of the Transitional gas pipeline. The Yugoslav officials from the Serbian government announced in Belgrade last week that the 170 km long pipeline will deliver about 2 billion cubic metres of gas and the project will require US$108 million to be completed by the beginning of 1999. At present, Russia delivers its gas to Yugoslavia through Hungarian territory.

Central Europe: On 24 September, NATO granted a special "observer" status to Poland, the Czech Republic and Hungary. All three countries will be invited to the Council of NATO ambassadors assembly in the beginning of 1998.

Poland: The Polish State Electoral Commission announced the official results of the 21 September parliamentary elections. Solidarity Election Action (AWS) won with 33.83 per cent of the vote, followed by the Democratic Left Alliance (SLD) with 27.13 per cent and the Freedom Union with 13.37 per cent. The Polish Peasant Party (PSL) gained 7.31 per cent and the Movement for Reconstruction of Poland received 5.56 per cent of the votes. Solidarity Election Action has begun a series of meetings to discuss the formation of a new government coalition. Leszek Balcereowicz, the UM leader said that a coalition should be formed before the first parliamentary session, due on 20 October, once the present government resigns. AWS spokesman, Tomasz Tywonek said that the new candidate for prime minister should be recommended by AWS. meanwhile, AWS leader Marian Krzaklewski also confirmed that AWS will reform as a new Christian democratic party, which will be registered next week.

Poland: Gdansk Refinery SA spokeswoman, Ewa Sielicka said on Wednesday, that the company has asked Dresdner Bank Luxemburg SA to arrange a US$120 million loan, to complete the refinery's $450 million modernisation project. Gdansk Refinery SA, which is part of Nafta Polska, had already secured a $100 million loan from a consortium formed by Merrill Lynch, $90 million from the refinery's turnover and $45 million from Bank Ochrony Srodowiska SA and the National Fund for Environmental Protection.

The head of Ford Poland SA, Mr Nick Palmer, said that the Ford Motor Company gained 4 per cent of the Polish car market with the sale of 14,627 cars by the end of August. Mr Palmer also said that Ford will produce a Ford Fiesta van.

The National Bank of Poland (NBP) is preparing to issue securities from 1 January 1998. According to Dziennik Prawa i Gospodarki, the Polish daily, the NBP's decision whether or not to issue securities will depend on the effectiveness of its current policy of curbing credit offered by commercial banks. The severity of NBP's monetary policy will also depend on the size on the country's budget deficit. The securities however will be probably sold only to individuals and not to companies.

Slovakia: Slovnaft's deputy director of economic issues, Jolanta Petrasowa, said that the company, who is the sole oil refiner in Slovakia, expects to have a full year pre-tax profit of around 3 billion crowns (US$0.89 million), up from 2.31 billion last year at the expected turnover for the whole year of 44 billion crowns.

Czech Republic: The Czech Republic government announced its intention to sell its 48.7 per cent stake of Komercni Banka, 45 per cent of Ceska Sporitelna and 65.7 per cent of CSOB, the three largest commercial banks. All three banks have bad loans and Mr Ivan Filip, the republic's finance minister, said that they will have to be recapitalised as a part of any sell-off. The European Bank for Reconstruction and Development and the International Finance Corporation are in talks with the Czech government about taking minority stakes in the three banks to help them stabilise. The EBRD bank confirmed that it will grant a loan of US$200 million to them, which could be converted later into shares. The IFC, the financial arm of the World Bank said that it is considering providing up to US$75 million of subordinated debt to CSOB with the option of swapping it for a corresponding amount of shares. On 4 September, the Czech parliament approved privatisation plans for the banking industry and also the sale of the fourth largest bank, the IPB to the Japanese investment bank, Nomura. The sale however of Komercni Banka and CSOB is complicated by the fact that both are still partly owned (15 and 24.1 per cent respectively) by the Slovak government.

On 22 September, IKS KB, the investment arm of Komercni Banka, launched two new open-ended mutual funds, the IKS Balancovy Fund and the IKS Dluhopisovy Fund. The IKS Balancovy Fund will transfer assets from the IKS KB's closed Universum Fund and shares and bonds will make up to 60 per cent of the total portfolio, with T-bills and standard bank deposits making a maximum of 30 per cent each. The IKS Dluhopisove Fund will be composed of up to a maximum 80 per cent in bonds and up to 50 per cent in T-bills or standard bank deposits. Both funds have been approved by the Ministry of Finance.

Hungary: The Hungarian Foreign Trade Bank (MKB) is planning to purchase a majority stake in the Croatian Convest Bank, it was announced at a conference of the bank's partners, who are interested in new acquisitions. In September, the MKB opened an office in Bucharest as the first step toward the acquisition, which should be confirmed within the next few days.

Poland: A 51 per cent stake in the Huta Stali steelworks, part of the Huta Sendzimira steelworks and one of the most important of Polish steelworks will be privatised in 1998, it was announced by Rzeczpospolita, Poland's leading press agency, on 24 September. Among the potential buyers are the Austrian firm Voest Alpine Stahl, which is considering buying the whole stake. Also interested are British Steel, Thyssen and Usinor. According to the government, a condition of purchase is the inclusion of both the Huta Katowice and Huta Stali steelworks and also the launch of a rolled steel production line.

The government has approved privatisation plans for Ursus, Poland's largest manufacturer of tractors. The state will retain a majority stake and 39.65 per cent of a total value of 560 million zlotys (US$164.4 million) will be given to the company's debtors. As part of the Ursus privatisation, the government economic committee, KERM has accepted a conversion into shares of the debts owing to the company's 52 largest creditors. The Industry Development Agency (ARP) wants the US company AGCO to become part of Ursus. In 1996, Ursus produced only 16,700 tractors and according to ARP the company needs to produce 30,000 to 35,000 units to make a profit.

The Polish Securities Commission (KPW) approved new share offerings from nine companies including the country's largest hotel chain and travel agency, Orbis SA. Orbis will sell to the public 10 million of their 37.5 million shares. The other eight companies are: Compensa SA; Wawel SA; Enerhgomontaz Polnoc SA; Zaklady Wyrobow Powlekanych; Art Marketing Syndicate of Poznan; SA; Stomil SA; TIM SA and Mostostal Zabrze.

The food processing firm Zaklady Tluszczowe Kruszwica SA is to issue new shares and hopes to raise US$18 million. The new share issue is reported to be taken up by its current investor, the Dutch company Cereol Holding. Cereol will increase its stake in Kruszwica from 45 to 60 per cent. Kruszwica intends to spend $40 million on the implementation of new production lines and other modernisation. Kruszwica holds about 40 per cent of the Polish seed and vegetable oils processing market.

Guide to Eastern European currencies as of 26 September 1997

* Rates derive from the FT as of 26 September 1997 Rates for Georgia, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan provided by the National Banks of each country