Central Europe: the Japanese foreign ministry has invited government representatives from the Czech Republic, Hungary and Poland to discuss the opportunities for Japanese companies to invest in Central European economies.

Estonia: Finland's paper and cellulose manufacturer, Metsaliitto Oy, expressed its interest in supporting the Estonian government's project to build a US$300 million cellulose factory. The meeting between Estonia's Minister of Economics, Jaak Leimann and the Metsaliitto representative confirmed that the government does not intend to become a shareholder in the project, but will permit the use of a state forest as a raw material source.

Estonian Finance Minister, Mart Opmann, said that the main goal for the government for the next few years is to maintain macroeconomic stability, and to achieve 5.5 to six per cent growth of Gross Domestic Product (GDP) a year for the next few years. The forecast for CPI for 1998 is a 9.6 per cent.

Hungary: The World Bank has approved a loan of $150 million to Hungary to support the reform of the country's higher education system. The loan, which will be repaid over a period of 15 years, will be used to modernise administration, institutional development, and to upgrade schools and colleges.

According to the Minister of Finance, Peter Medgyessy, the monthly rate of inflation in March could fall to 14 per cent. He also confirmed the forecast of four to five per cent growth of the economy for this year. Mr Medgyessy said that the next four years would be as hard for the economy as the last four had been; he stressed the need for a further reduction of the general government deficit, the reform of the national health system and changes in the tax system.

Hungary and Slovakia have signed a framework agreement to locate and build a $600 million to one billion dam at Nagymaros or Pilismarot, in Hungary, 60 kilometres (km) from Budapest, to boost the two countries' power supplies. The original agreement was signed between Hungary and the former Czechoslovakia in 1997, but Hungary later pulled out.

Kyrgyzstan: according to the National Statistics Committee, GDP in 1997 rose 10.4 per cent in real terms against 1996. Gross agricultural output was up 10.7 per cent and the Consumer Price Index rose 14.8 per cent against 34.9 per cent in 1996. However, the foreign trade turnover was down by six per cent and amounted to $1.155 billion.

Poland:on 3 March the National Bank of Poland (NBP) confirmed that the money supply in February was 0.6 per cent higher than at the end of 1997, standing at 177.542 billion zloty ($51.69 billion). Poland's public debt for the same period of time was 51.3 billion zloty, seven per cent lower than in December 1997.

Russia: on 4 March the Russian State Duma passed a law on precious metals and stones, which regulates the mining of precious metals and stones, as well as the functioning of their market. Mining and production of precious metals and stones may be done solely by organisations that have obtained special licences. It also says that Russia has special state funds and reserves of precious metals and stones, such as the Federal Fund of Reserve Deposits, and the Diamond Collection of Russia. The law underlines the country's gold reserve, designed to effect the state's financial policy and to meet the emergency requirements.

Russia's interest repayments on its foreign debt ($130 billion), owed to the London and Paris Clubs of Creditors and to the International Monetary Fund (IMF) and the World Bank, will amount to seven billion dollars per year, or 1.3 per cent of the GDP.

Slovenia: according to the Governor of the Bank of Slovenia, France Arhar, the Bank's Council, has completed its assessment of the monetary policy objectives in 1997, and has confirmed that they have been achieved. The M3 money supply expanded by 22.9 per cent in the fourth quarter of the period 1996-1997. In the monetary policy for 1998, the bank stressed that the main objectives are to keep the budget deficit at the present level, and to develop the pension system, which should start as soon as possible. The bank and the government policy will assess and consider the conditions for the European Union (EU) accession and the strategy for the entry.

Czech Republic: on 2 March, Ceska Sporitelna announced that its profit for 1997 fell to 1.203 billion crows ($35.49 million), from 1.886 billion crows in 1996. The fall of the profit is due to the monetary turmoil in the first half of 1997, the falling of the capital markets, and also to the floods in the eastern parts of the Czech Republic last July.

Komercni Banka, the biggest Czech bank by assets, has reported 457 million crowns ($3.4 million) unaudited net profits for 1997, which is more than the previously estimated 100 million, but lower than the profit of 5.24 billion crowns in 1996.

Latvia: the Latvian Investment Bank signed a credit agreement for the syndicate loan of 25 million DM ($46.36 million), organised by two German banks, Landesbank Schleswig-Holstein Girozentale and Hamburgische Landesbank Girozentrale. The loan is to be repaid in three years and is based on LIBOR rate. The new loan will be used to finance the new investment projects and to finance the existing credit portfolio.

Poland: Masterlink Express, the transport and courier service company operating on the Polish market since 1991, is considering selling a 91 per cent share of the company to Swedish Post. Masterlink Express holds a 20 per cent share in the Polish transport and courier service industry, with a very large expanding potential in the future.

Hungary: during a conference in Nyiregyhaza, eastern Hungary, on 3 March, the Hungarian Minister without a portfolio for privatisation, Judit Cshisha, said that Hungary has completed its privatisation programme, leaving only a few fields of the economy in state hands. Those sectors are: the nuclear energy industry, the electricity network, transport, radio and television broadcast and the state farms. Since 1990, the revenue from privatisation has exceeded 1,200 billion forints ($5.75 billion). During the same period Hungary attracted over $16 billion of foreign working capital, of which one third was directly related to privatisation.

Latvia: on 3 March, the Latvian Privatisation Agency gave the green light to proceed with the privatisation of the oil company Ventspils Nafta, in a third round of the public offer, which is expected to get under way from 23 March. Ventspils Nafta will sell five million state owned shares.

Lithuania: the administration of the Kaunas Region of Lithuania announced a tender last October, which will be evaluated by 1 March. Two potential investors, the Belgium consortium AOJ NV and a local group of seven private investors, Nova ir Partneriai, have submitted a bid. The Belgium consortium represents the Belgian Railroads, the Federation of the Ports of Antwerpen as the main participants. The Kaunas Free Trade Zone is to be a transport junction, providing free transportation services and combining the freight terminal, electronics and light industry.

Lithuania's Aliejus company, the mayonnaise producer based in Vilno, will be opened for a privatisation tender later in March, announced the Privatisation Commission on 2 March. The state will sell 70.24 per cent of a company with a face value of 6.28 million litas ($1.57 million), and a share capital of 8.95 million litas. Bids will be accepted from 30 April until 1 June 1998.

The Lithuanian Privatisation Commission annonced the second public tender for the privatisation of the 102 million litas valued Klaipedos Smelte stevedoring ompany. The state intends to sell its 89.5 per cent stake in the company, which has a share capital of 38.03 million litas ($9.5 million).

Poland: Leszek Balcerowicz, the First Deputy Prime Minister and also the Minister of Finance, was re-elected as a Chair of the Freedom Union Party (UW), the second party in the governing coalition.

Serbia: up to 30 people were reported killed in Serbia's southern province of Kosovo during two days of clashes between ethnic Albanian rebels and police forces. (FT 02/03/98)

Exchange rates (6 March)

Rates derive from the FT as of 6th March 1998.
Rates for Georgia, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan provided by the National Banks of each country