Bulgarian President, Petar Stoyanov, said that Bulgaria will repay its outstanding US$80m debt to Poland, to clear obstacles preventing it from entering the Central European Trade Agreement (CEFTA). After meeting with President Aleksander Kwasniewski, who arrived in Sofia for a 2 day visit on 10 December, Stoyanov said that 'Poland's support for our membership in CEFTA as a stage to EU accession is of exceptional importance to us...we will not remain of the past to affect our long-term relations and future membership in CEFTA.' (Reuters)

In the Czech Republic it was confirmed by the Local Development Ministry that on 11 December, the cabinet approved the proposal for business support programmes for 1998. The support for next year will include the nationwide programmes: credit, market, special and guarantee and regional programmes: region, village, regeneration and preference. Both sets of programmes will attract a total of 275m crowns each.

In Hungary the Central Statistical Office confirmed that consumer prices rose by 1.2 per cent in November, from 1.1 per cent in October and 0.8 per cent in November 1996. Meanwhile, the CPI rose by 18.2 per cent, a fall in comparison with 20.1 per cent of the growth in 1996 over 1995.

The report from the Central Statistical Office has marked a regional gross domestic product (GDP) imbalance in Hungary. The country's central region, including Budapest and Pest county, contributed 41.8 per cent to the overall GDP, an increase of 1.5 per cent from last year, attributed to the rapid development of trade and processing. According to the report, GDP per capita in Budapest was 3.3 times that of the northern region of Nograd and the eastern region of Szabolas-Szatmar-Bereg county.

In Poland, following the meeting of the Cabinet Committee for Economic Affairs (KERM), the Deputy Prime Minister and Minister of Finance, Leszek Balcerowicz, said that KERM will recommend a reduction in the number of quotas and a unification of the terms of their distribution.

During the conference on economic co-operation in Warsaw last weekend, the Japanese car company Toyota revealed its plans to invest in Poland and to launch spare parts production. By mid-1997 Japanese companies had invested $41m in Poland, with plans to invest an additional $253m in the near future.

In April 1998 Poland plans to implement the refund of VAT to foreign tourists, in order to encourage them to buy more in Poland and to boost sales of Polish merchandising goods.

On 8 December the Polish Finance Minister, Leszk Balcerowicz, held a meeting with British Trade Secretary Lord Stanley Clinton-Davis. During this meeting both statesmen agreed that to bring the Polish economy into line with European Union (EU) standards, it is necessary to introduce reforms and the privatisation of large enterprises. Lord Clinton-Davis said he hopes that the banking sector, telecommunications and heavy industry would all be privatised.

During the opening ceremony of the 100m DM centre in the southern town of Czeladz, the company spokesman, Dierk Kowalke, told of how the German retail company, Metro AG, plans to invest 1bnDM in Poland, thereby gaining 25 per cent of Poland's retail business. This will be the largest of Metro's investments in central and eastern Europe to date, with the first of the planned 12 shopping centres being built within the next five years.

Mieczyslaw Bak, chief economist at the Institute for Private Enterprise and Democracy at the Polish Chamber of Commerce (KIG), stated that the Polish zloty should be devalued by about 8 per cent in order to keep the growing trade deficit under control. KIG expects Poland's trade deficit to reach $16.6bn in 1997 and $18.9 per cent in 1998.

On 11 December the Slovak Statistical Office said that during the first nine months of 1997, investment totalled 181.3bn crowns, a 25.2 per cent increase over the same period last year. Investment slowed in the third quarter, primarily as a result of an increase in interest rates on bank loans. The share of private investment in overall investment during the same period rose 2.7 per cent to 63.6 per cent. Financial organisations reported a profit of 4.1bn crowns, 40.3 per cent lower than last year. Profits in the banking sector fell 20.7 per cent to 3.9bn crowns, while the profits of insurance companies fell 35.9 per cent to 1.5bn crowns. Losses by investment companies and funds were three times higher than for the same period last year, totalling 1.3bn Slovak crowns. Similarily, profits in non-financial organisations were also lower by 8.2 per cent and totalled 52bn crowns. The overall yearly decrease was caused by faster growth in expenses than in revenues.

The Slovak Parliament approved the 1998 budget, following the final discussions on the most important issues of funding for social security, education, health, housing and infrastructure. Minister of Finance, Sergej Kozlik, is expected to approve the amendments to the VAT Act, which should secure revenues of 1.7bn Slovak crowns, from a rise in VAT on telecommunication services from 6 to 23 per cent. Budget revenues are planned at 179.8bn crowns and expenditures at 184.8bn crowns, leaving a deficit of 5bn crowns.

In the Baltics, Lithuanian Utena Beverages Company, Estonian Hansa Investment and Baltic Beverages Holding (BBH), sealed the establishment of a joint venture on 9 December. Under the agreement, Hansa Investment will put 30.5m litas ($7.6m) and BBH another 19.5m litas into Utena Beer. Utena Beverages will hand over all assets, financial liabilities, its trademark, name and manpower to the joint venture. Utena Beer`s General Director, Stasys Krasauskas, confirmed that the investments will be used for new technology and to build a new fermentation shop.

In Poland, Polfa Krakow, one of the biggest pharmaceutical companies, announced that on 8 December its shareholders decided to launch a new share issue designed for Croatian pharmaceutical giant Pliva, boosting Pliva's stake from 70 per cent to 81 per cent. Polfa Krakow claims 5.4 per cent of Poland's pharmaceutical market in terms of sales volume, and 3.2 per cent of sales value. Pliva will invest $70m in Polfa Krakow within six years.

Poland's largest refinery, Perochemia Plock, which boosted processing from 2.5m to 11.5m tonnes, expects a net profit of 650m zloty ($186m), compared with 220m zlotys in 1996, confirmed Petrochemia's financial director Marek Mroczkowski. Another Polish refinery, Gdansk Refinery, plans to almost double its net profit from 46m zlotys to 90m zlotys, said Mr Stanislaw Pokojski, its financial director.

The Finance Ministry has stopped the privatisation of the Karlovy Vary airport, the first international airport in the Czech Republic due to be privatised. The Ministry spokesman, Michal Jirkovsky, said that the airport will be sold in harmony with the Czech Aiport Administration (CSL), which is able to cover its annual losses of 6m crowns with its expected gross profit of 180m crowns. The Ministry added that it will be necessary to search for a strategic partner.

The Bank of Latvia will decide on a possible merger of Saules Banka and the Estonia's Tallinna Pank. Estonia's Central Bank has already allowed Tallinna Pank to buy Saules Banka's shares. After an exchange of shares is complete, Tallinna Pank will acquire full control over Saules Banka. Under the scheme 1,982,744 new shares in Tallinna Pank will be issued before the end of the year, which will be exchanged for one share of Saules Banka. As a result, the current owners of Saules Banka would acquire a stake of 17.1 per cent in Tallinna Pank, leading them to control an 80 per cent stake in Saules Banka, while remaining shares will be owned by the FMO finance corporation of the Netherlands. At present Tallinna Pank holds 20 per cent of the shares in Saules Banka, while FMO holds a 15 per cent stake in Tallinna Pank.

Following the successful placement of its shares, which were issued as Global Depository Receipts, the Latvian bank, Unibanka, will become the first Baltic bank to be listed on the London Stock Exchange. On 4 December, Unibanka's GDRs were quoted on the SEAQ International System at $4.80, after 4.7 million of the bank's shares were placed by the Union Bank of Switzerland, the organiser of the issue. On the same day the shares were listed at $4.90. Before the end of the year Unibanka's GDRs will also be traded in the United States (US) on the Portal system.

The Lithuanian Privatisation Agency privatised state-owned enterprises worth 72.2m litas ($18m), with the privatisation of the main strategic assets to begin in 1998. The forthcoming privatisations include Lithuanian Telecommunications, Akmene Cement, Baltic Shipyard and Sanitas Pharmaceuticals. Beginning next year, two-thirds of the funds from privatisations will be allocated to compensate for depreciated rouble deposits made by residents.

The privatisation tender of the Lithuanian Klaipeda-based Smelte cargo shipping company has failed, since no bids were received by the deadline of 3 December. Vitalija Slivinskiene, Director of the Lithuanian Privatisation Agency, said that the result of the bid was a surprise, as the company was one of the 14 strategic companies listed for privatisation. Over the first ten months of 1997 the company shipped more than one million tonnes of cargo and estimated a net profit of 5.2m lits, with an earned net profit of 3.9m lits in 1996. Smelte has a share capital of 38.03m lits and is 89.5 per cent state owned. The state put up its stake at an initial price of 102.1 m lits, triple the face value.

Last week the Lithuanian Privatisation Agency signed an agreement with Banque Paribas, who will become a consultant in the privatisation of a 51 per cent stake in Mazeikiu Nafta Oil refinery. Paribas will prepare the privatisation of Mazeikiu Nafta together with McDermott, Will & Emery, the representing law company, and Ernst & Young, the international auditors, as well as some local companies including, Talinvest-Suprema brokerage and the auditing partners, J.Kabasinskas & Partners. Under the agreement the privatisation tender will be announced within four months, with the sale of the company set to take place in six months. Laima Andrikiene, Minister of European Affairs, said that the state will retain a 34 per cent stake in Mazeikiu. The company has an authorised capital of 580.7m lits and in the first ten months of 1997, earned a pre-tax profit of 26.27m lits on a turnover of 1.88bn lits.

In Poland the Deputy Chairman of the Supreme Board of Inspection (NIK), Jacek Uczkiewicz, confirmed that the revenues from privatisation in 1996 were up by 18.4 per cent from the previous year, amounting to 3.749bn zlotys ($1.059bn). At the end of 1996 State Treasury assets were worth 143.279bn zlotys. He also said that the large investments in Poland (over $1m), amounted to $5.2bn in 1996, from the beginning of economic transformations in 1990 to the end of 1996 to $12bn. The share of foreign capital in investment carried out in 1996 went up to 20 per cent, compared to 13 per cent in 1995.

From 5 January 1998 the Warsaw Stock Exchange in Poland will extend its trading sessions by 30 minutes to 3pm, said WSE president Wieslaw Rozlucki. He also said that in the next two or three years the trading hours will be extended to 5pm.

The State Treasury Ministry rejected the new issue of shares of National Investment Fund Magna Polonia (NIF No 6), which was planning to increase its capital. The NIF Magna wanted to issue 6 to 9 million shares, which would raise more than $30m to be used on a two year investment project.

In Poland a new mutual fund, Atut 4, will be introduced on the Polish market in the first quarter of 1998, said Pawel Wojciechowski, President of mutual fund association Atut SA. The new fund will follow two other mutual funds in Poland, Pioneer and Korona, and will invest in National Investment Funds securities. Initial investment will be a minimum of 1000, with an additional monthly fee of 100 zloty.

On 8 December Polish Prime Minister, Jerzy Buzek, met with the Primate of Poland, Cardinal Jozej Glemp, who is declared to be very important to the solidarity rooted government. Mr Buzek stressed that the government attaches great weight to the opinions of the Roman Catholic Church. He himself is a top official for both foreign and social policies, performing tasks and canvassing for reforms indispensable to the future of Poland.

Leszek Miller became the new leader of the Social Democracy for the Republic of Poland (SDRP), defeating Wieslaw Kaczmarek by 311 to 86 votes.

In Slovakia the Democratic Union (DU), an opposition party, nominated DU Deputy, Juraj Svec, as a candidate for the first round of presidential elections. Professor Svec is the second candidate to be nominated, after the Democratic Left Party (SDL) nominated Juraj Hrasko, a member of the Slovak Academy of Science who served as environmental minister between March and October 1994.