Czech Republic: on 10 June the Czech Statistical Office (CSU) reported that in April, industrial production was up three per cent compared to April 1997. In the first four months of this year industrial production was up seven per cent compared to the same period last year.

According to the CSU, the trade deficit with Russia fell 1.34 billion crowns year-on-year to 7.69 billion crowns (US$233.7 million) in the first quarter of 1998. Czechoslovakia's imports from Russia comprised of mineral fuels and lubricants, which accounted for almost 80 per cent of all imports in the first three months of 1998. Exports comprised mainly of machines and vehicles, accounting for 28.7 per cent of the overall exports.

The CSU also reported how the consumer price index (CPI) in May grew by 0.1 per cent against April and 13.0 per cent over May 1997. The average inflation for the last twelve months compared to the previous twelve months stood at 11.1 per cent in May. The Czech National Bank has set a goal of 5.5 to 6.5 per cent net inflation by the end of this year. The Bank is also aiming for 3.5 to 5.5 per cent net inflation in the year 2000.

The current account of the balance of payment closed the first quarter of this year with a deficit of 12.1 billion crowns ($0.3 billion). The foreign trade deficit stood at 17.7 billion crowns, thus contributing most to the overall deficit. Revenues totalled 24.1 billion crowns ($0.7 billion).

The Ministry of Labour and Social Affairs said that the unemployment rate on 31 May 1998 stood at 5.3 per cent, down 0.1 per cent from April.

Estonia: from 1 July, the Bank of Estonia will impose additional measures to strengthen the country's banking sector. These measures include a general provision of two per cent established for all loans, the position of the Deutsche Mark and the Estonian kroon - which will be treated as positions of one and the same currency - and new capital requirements to cover interest rate risks.

The municipal government of Tallin is planning to take a new loan for the capital's infrastructure development. The city of Tallin presented a five-year investment plan which was approved in 1997. So far Tallinn has taken in loan money in two bond issues, arranged and lead managed by Nomura International in 1996 and this spring, respectively. The first issue totalled 480 million kroons ($33.8 million) and the second issue was 240 million kroons ($16.9 million).

The CSU confirmed that foreign trade turnover totalled 9.8 billion kroons ($690.1 million) in April. Estonia's trade deficit in April was 2.4 billion kroons, up from 1.8 billion kroons in the same month last year. In April 1998, exports rose 12 per cent and imports 20 per cent compared to April 1997.

Hungary: on 12 June, Peter Balas, Deputy Secretary at the Ministry of Industry, Trade and Tourism said that the Government had raised import duties on Polish goods as a counter measure to Poland's continued refusal to lower taxes on imports of Hungarian feed maize. The decision to withdraw the preferential tariffs on imports of starch from Poland affects 19 Polish exported products. The import tariff is now between 27 per cent and 67 per cent.

The CSU reported that consumer prices in May rose 1.2 per cent from April and 15.8 per cent from April 1997.

Latvia: The World Bank plans to open a credit line worth $25 million to promote the agricultural development of Latvia. The loan, serviced by Latvijas Hipoteku un Zemes Banka, Latvijas Unibanka and Parekss Banka, will be extended for a term of 15 years. It will be the second loan granted to Latvian agricultural development following the $25 million loan issued in 1994.

According to the Ministry of Finance, the revenues of Latvia's state basic budget exceeded expenditures by 16.804 million lats ($28.1 million) in the first four months of this year. Since the beginning of the year the revenues amounted to 286.380 million lats, while expenditures were 269.676 million lats.

Lithuania: Johannes Linn, The World Bank's Vice-President for Europe and Central Asia, said that the Bank will advise Lithuania on complying with European Union (EU) requirements in environmental protection, agriculture and other fields. Since 1992, The World Bank has issued $270 million in loans to Lithuania for various projects. Four new projects on healthcare, municipality development, re-structuring of the Klaipeda sea harbour and the central heating network are in preparation. The World Bank said it is ready to issue Lithuania with the second half of an $80 million structural adjustment loan as soon as the Government submits a package of legislation on private pension funds and other draft social laws to Parliament.

Moldova: on 8 June, Moldova and The World Bank signed a $16 million credit agreement on the inventory project to promote land privatisation and the property market. Since Moldova joined The World Bank in 1992, the Bank committed $278 million for 11 projects in the Republic.

Poland: following his meeting with members of The World Bank mission on 10 June, Leszek Balcerowicz, the Deputy Prime Minister and Finance Minister, said that Poland may receive a one billion dollar loan from The World Bank if the programme for overhauling the loss making coal mining industry is improved. The programme includes the decentralisation of management, creation of better incentives for mines' management, wage growth control in the sector and environmental protection.

Hanna Gronkiewicz-Waltz, President of the National Bank of Poland (NBP), said that if Poland wants to bring inflation down to 8.5 per cent, next year's wages should not rise above 2.5 per cent, as opposed to the three per cent previously projected. 'With inflation going down it will be possible to abandon the crawling devaluation of the zloty', said the Head of the central bank.

On 10 June, the NBP said that the money supply in May rose by two per cent, 3,760 million zlotys ($1.09 billion), to 187,286 million zlotys. NBP said that the money supply grew by 6.1 per cent from 31 December 1997 to the end of May this year.

The Head of the Polish Centre for Strategic Studies, Minister Jerzy Kropiwnicki, said that the 1997 Polish-Italian balance of trade was 'dramatic', with Poland's deficit reaching $2.6 billion. He said, 'In such a situation we would have to choose from three strategies: the best would be to increase exports, worse would be to lower imports and the worst would be a cooling down of the economy.'

On 9 June, at a seminar on investment possibilities for Polish enterprises in Kazakhstan, the Ministry of Economy said that trade between Kazakhstan and Poland is too low. Last year, turnovers with Kazakhstan came to $84 million, with imports from Poland accounting for $55 million. Poland, which mainly sells furniture, food products and chemicals to Kazakhstan, intends to export more machines and technical equipment.

Deputy Finance Minister, Jaroslaw Bauc, said that the guidelines for next year's budget provides for a 6.1 per cent growth of Gross Domestic Product (GDP), and inflation between eight and 8.5 per cent at the end of 1999. Bauc stressed that the current account deficit should not exceed five per cent of the GDP. 'A five per cent deficit is fairly safe and acceptable.' According to the Deputy Minister, the current account deficit will amount to between four and 4.2 per cent of GDP. Privatisation revenues are expected to be 15 billion zlotys ($4.4 billion), of which four billion will be used to finance the Social Insurance Fund and the remaining 11 billion for reprivatisation.

Romania: Daniel Daianu, Minister of Finance, announced the external indebtedness maximum level for 1998 as $2.9 billion. In order to keep this level, Romania should reduce its external debt by returning $1.7 billion in 1998, followed by another $2.2 billion in 1999.

Russia: during an interview in Washington, Venyamin Sokolov, Head of the Chamber of Accounts of the Russian Federation (established in 1995 to monitor Government spending), said that at least one-sixth of Russia's federal budget, six billion pounds sterling, was misspent in 1997, mainly through mismanagement and corruption.

Boris Fyodorov, Russia's new tax chief, pledged to toughen tax collection to prevent the falsifying of statistics on companies' performances. This should help to revive Russia's ailing economy.

Slovakia: on 1 June the Ministry of Finance said that the State budget was developing in line with full year plans. Subsequently there was no need to revise its main targets, despite an acceleration in the fiscal deficit in May, which has risen to Sk2.406 billion ($69.7 million) in the first five months of the year. (Reuters)

Turkmenistan: the central bank reported that the consumer prices fell 0.5 per cent in May over April, but had grown by 11.1 per cent in the first five months of this year.

Ukraine: following the Co-operation Council meeting in Luxembourg, EU officials confirmed that they will provide technical assistance to Ukraine, in order to facilitate the country accession to the World Trade Organisation (WTO) and to create a framework for EU companies to do business in the Ukraine.

Lithuania: the Irish company, Irish Trading Ltd, which owns a 32.1 per cent stake in Lithuania's Penevezys-based TV tube manufacturer, Ekranas, plans to increase its stake in the factory. The new stock emission will boost the share capital of Ekranas to 125.2 million litas ($31.3 million). The company is planning to invest the proceeds from the equity issue into upgrading its technologies. Ekranas posted a net profit of 5.4 million litas on sales of 120.2 million litas in four months of this year, compared with 5.5 million litas on sales of 95.8 million litas a year earlier.

Poland: on 10 June, Jan Choczaj of the then Cracow Provincial Office said that foreign companies invested $500 million in the Cracow (southern Poland) province in 1997. The biggest investment last year was the privatisation of the Polfa SA pharmaceutical plant in Cracow, which was bought by Croatian Pliva for $123.8 million.

Two major Polish steel mills, Huta Sendzimira, HTS, and Huta Katowice, HK, should be linked together under one strategic investor, said Treasury Minister, Emil Wasacz. The joint offer made by the Austrian, Voest Alpine Stahl, and the Dutch, Hoogovens, is the only one to appear on both the Huta Katowice and Sendzimira shortlists of investors. HTS also has offers from the German company, Krupp Stahl AG, and the British ISPAT Int. to consider, while HK has British Steel and the Italian Danieli.

Apache Corp., one of the largest independent US oil and gas companies, will invest about $50 million in Poland over the next three years, said Mark Bauer, Head of the Polish unit. The company will start drilling wells this summer. Apache in Poland holds approved and pending concessions covering 47, 000 square kilometres, making it the second largest operator/leaseholder after Poland's PGNiG oil and gas company.

Romania: US bank, Bankers Trust, announced that the private equity arm of emerging Europe, Middle East and Africa Merchant Bank, the EEMA private Equity Group, had finalised an agreement to invest $7.65 million in a holding company which owns 99 per cent of the shares of snack food producer, Star Foods Romania SA.

Russia: Russia's Nizhegorod Motors, a $854 million joint venture between AO Gorkovsky Avtomobilny Zavod (GAZ) and Fiat of Italy, will start vehicle production in October 1998. The venture is planning to produce 150,000 units a year.

The first international financing of an offshore oil and gas project, around Sakhalin Island in the far east of Russia, was announced on 11 June. The project will attract $177 million from the European Bank of Reconstruction and Development (EBRD), the US government owned Overseas Private Investment Corporation and the Export Import Bank of Japan.

Czech Republic: the Nova Hut steel company reported that last year, its net profit amounted to 397.629 million crowns ($12.1 million).

Ceska Exportni banka, which offers advantageous loans for domestic exporters, closed 1997 with a profit of 35.4 million crowns ($1.1 million). Tomas Revesz, the Chief Executive Officer (CEO), said that the company will use the profit to build reserves in order to raise owners' equity. This will affect capital adequacy and the extension of more loans. Deputy Finance Minister, Michal Frankl, added that none of the profit will be paid to the State budget.

Jan Sykora of Wood & Company said the partner companies, Wood & Company and Commerzbank, have concluded an agreement on the division of their business activities in the area of trading bonds and shares. Commerzbank and Wood & Company founded WoodCommerz in 1996, as a joint venture focusing on the central European bond market. Each company owns half of the joint venture. While WoodCommerz trades in bonds, Wood & Company trades in shares. The latter will now concentrate on securities markets in Central and Eastern Europe, advising in the area of investment banking. Its name will be changed to Commerzbank Capital Markets.

Last year, Daewoo Avia showed a loss of 236.5 million crowns ($7.1 million) on 5.4 billion crowns in revenues, said Board Chair, Vlastimil Devera. Speaking at the Autotec 1998 Trade Fair in Brno, Devera said that Daewoo Avia's sales were up 1.592 billion crowns year-on-year, an increase of 41.8 per cent. He said that losses due to the Czech crown's exchange rate after the crown's devaluation had a negative impact on the company's figures. Daewoo Avia is the producer of utility vehicles and lorries.

Estonia: Estonia's Hoiupank reported a 26.8 million kroons ($1.8 million) loss in May, mostly due to the reservation of a possible 225 million kroon loss arising from the closure of a shares deal with Daiwa Bank. Hoiupank's total assets stood at 9.554 billion kroons at the end of May, down by 118 million kroons from the preceding month.

On 11 June, Hansapank and Hoiupank signed a merger agreement with the share division ratio at 65:35, respectively. According to the merger agreement, to be submitted for approval by the Banks' boards at the beginning of this week, the new entity's name will be AS Hansapank.

Hungary: Globex Holding Rt. reported that one hundred million forints worth of receivable and collateral debts of the company are to be sold via tender through the firm Reorg-Faktor Rt., on commission from Facultas Kft. The debts are part of a 14.8 billion forint ($69.1 million) portfolio bought from Budapest Bank in October last year by Facultas. Between two and 2.5 billion forints is expected to be regained by the Finance Ministry through the sale.

Latvia: Latvia's third largest commercial bank in terms of assets, Rietumu Banka, reported a net profit of 2.87 million lats ($4.8 million) in the first five months of this year.

The Board of the Bank of Latvia allowed Latvijas Hipoteku un Zemes Banka, ranked 19 among Latvia's commercial banks in terms of asset volume, to increase its share capital from 3,830,500 lats to 4,745,500 lats ($7.9 million). Hipoteku Banka is the only commercial bank in Latvia wholly owned by the state.

Lithuania: Lithuania's Klaipedos Nafta oil terminal reported a loss of $5.5 million in the first five months of this year, due to the crisis in world oil prices and the drawn out reconstruction of the terminal, said the company's General Director, Martinas Gusiatinas. The terminal is capable of shipping 400-500 thousand tonnes of oil products a month, but its capacity continues to be limited by the delayed reconstruction of the terminal.

Poland: CEO, Konrad Jaskola, said the Petrochemia refinery is to upgrade its chemical and synthetic fibre section as part of a $1.10 billion modernisation, scheduled to take place between 1999 and 2003. The company has already spent over $1.3 billion on improvements in fuel production.

Russia: on 5 June, the credit rating agency, Moody's Investor Services, assigned Gazprombank with a B2 rating for long-term foreign currency deposits. It was declared 'not prime' for short-term foreign currency deposits, although it was given a D rating for financial strength. Gazprombank had consolidated assets of approximately $2.2 billion at the end of 1997.

Slovakia: Ferona Slovakia, the metal company, posted a net profit of 4.6 million crowns in 1997 on sales of 2.9 billion crowns ($84.1 million).

Central and Eastern Europe: on 11 June, the EBRD launched a $100 million exchangeable bond, the first of its kind in Central and Eastern Europe. The three-year bond is exchangeable into shares which the Bank holds in Matav, the Hungarian telecommunications company. (FT 12/06/98)

Czech Republic: the EBRD has bought a 11.8 per cent stake in Ceska Sporitelna, for 2.5 billion crowns ($76 million). The Ceska Sporitelna's transaction is the EBRD&39;s first equity investment in a Czech bank. The move is considered to be the way to attract investors to the Bank, which is scheduled to be privatised later in the year. The stake makes EBRD the second largest shareholder in CS after the Czech Government, which holds 45 per cent.

The number of shares traded through the SPAD system on the Prague Stock Exchange (BCPP), will soon be raised, with liquid shares of Ceska Sporitelna and the RIF, IPF KB and SPIF cesky funds to be incorporated into the system, said Pavel Hollmann, Acting CEO. Other shares being traded through SPAD are those of CEZ, SPT Telecom, Unipetrol and Komercni Banka.

Latvia: the Latvian Central Depository of Securities has registered 100,000 common registered shares with voting rights in insurance company Balta. The shares, with a face value of one lat ($0.6), will be put on public circulation on 25 June. Balta's shares are quoted on the official list of the Riga Stock Exchange

Poland: Heineken, the Dutch brewer, has expanded its shares in the Polish beer market to more then one-third, with a takeover of the Australian owned Elbrewery. Heineken controls Zywiec, a listed brewery in southern Poland which holds 12 per cent of the market.

Heineken also plans a merger between Zywiec SA and Elbrewery, Lezajsk and Warka breweries, which would produce the largest Polish beer producing company. Once the merger is complete, Heineken will have 50 per cent plus one share; 25 per cent will be in the hands of small investors and the rest will be acquired by Brewpole's shareholders.

On 9 June, Treasury Minister, Emil Wasacz, said that the shares of Telekomunikacja Polska SA, TP SA, should be offered to the public in November. In the first stage of privatisation, 20-25 per cent of all shares will be sold, one-third of which will be traded on the Warsaw Stock Exchange (WSE) and the remaining two-thirds in foreign stock markets.

The State Treasury Ministry confirmed that it has set the price of a single share in the PeKaO SA Bank at 45 zlotys ($13.08). Fifteen per cent of the Bank's equity capital or 20,647,500 shares will be offered in a public sale from 15 June.

Romania: Finance Minister, Daniel Daianu, said that Deutsche Bank and JP Morgan had been mandated to arrange a five-year $250 million equivalent euro denominated bond issue. Romania re-entered international capital markets in 1995, with a syndicated loan arranged by Citybank.

Russia: Gazprom, Russia's biggest company, is urging the Government to sell further stakes in the group to a western strategic partner for about one billion dollars. Forty per cent of Gazprom is still owned by the Government.

Standard & Poor's, the US credit rating agency, downgraded Russia's sovereign rating by one notch to B-plus, following three turbulent weeks for Russia on the international markets.

To investors' disappointment, Russia's stock markets slid another ten per cent following the International Monetary Fund's (IMF) reluctance to give additional support in the form of a rescue package on top of a previously negotiated $9.2 billion three-year programme.

On 4 June, the Federal Commission for the Securities Markets, a key Russian market regulator, confirmed that it had approved the Moscow Interbank Currency Exchange (MICEX) to trade in futures contracts on stocks.

Bulgaria: on 8 June, the Government approved rules for the second round of a voucher privatisation programme, expected to be launched in June. Bulgaria is due to privatise around 50 per cent of its long-term assets by mid-1999 under agreements with the World Bank. Nine per cent of the state's assets were privatised through the first round of a mass privatisation programme launched in 1996 and completed in 1997.

Croatia: Milan Kovac, the Privatisation Minister, presented an amended list of assets for voucher privatisation, worth 13.1 billion kuna ($171.5 million). The list includes two petrochemical plants, Polimeri and Petrokemija.

Kazakhstan: Nursultan Nazarbayev, Kazakhstan's President, reassured investors that no review has been planned for the process by which the state has managed to sell a large part of its property. He also said that further state sell-offs will be aimed at stimulating the domestic share market.

Latvia : Janis Naglis, Head of the Latvian Privatisation Agency, said that the public offering of shares in Latvijas Gaze gas utility is likely to be postponed until August. Fifteen per cent of shares were expected to be offered for privatisation vouchers starting from 29 June. Naglis explained that the reason for the delay was the lack of shareholders' decision regarding whether to increase the company's share capital.

Between 29 June and 1 August, 5.3 million shares in the Ventspils Nafta oil terminal will be publicly offered for privatisation vouchers at the minimum price of 1.94 lats, in the fourth round of Ventspils Nafta's public sales. Ventspils Nafta has a share capital of 104 million lats, and 27 per cent of it is owned by the Latvijas Naftas Tranzits consortium.

Lithuania: the Transportation Ministry has proposed that 49 per cent of the 100 per cent state owned carrier, the Lithuania Airline, be privatised in the first stage, with a controlling package to be sold later. The company , which is included on the list of strategic enterprises awaiting privatisation, will increase its share capital from state subsidies. The first stage of the privatisation is to be completed before the year 2000.

On 9 June, the Lithuanian Parliament passed a law granting the state telecommunications company, Lietuvos Telekomas, a monopoly for a fixed telephone network service until 31 December 2002. Lithuanian Prime Minister, Gediminas Vagnorius, said that the reason for the monopoly is to secure a price of Lietuvos Telekomas before its privatisation, which is due this year. According to the privatisation rules of Lietuvos Telekomas, the state will sell a 60 per cent stock package in the company.

The Lithuanian Parliamentary Budget and Finance Committee confirmed the rules of a privatisation tender for the state-run Zemes Ukio Bankas. The first stage of the Bank's privatisation tender is to be announced on 15 June, the second is to be launched on 27 July, and the winner is expected to be named by 2 September. The winner will be invited for direct negotiations.

Poland: according to the report submitted to the EU on 8 June by the Polish Government, the state controlled steel industry is to be privatised by the year 2001. Privatisation is part of the $3.2 billion plan to transform and modernise the steel industry by 2005.

The EBRD wants to buy a $100 million stake in Poland's PKO SA bank, a $1.8 billion valued bank. PKO's Deputy CEO, Jerzy Zdrzalka, said that the sale will probably take place in July, after the first stage of the Bank's privatisation is completed. PKO SA will also offer 35 per cent of its stock to other investors. The shares are valued at 45 zlotys each.

Treasury Minister, Emil Wasacz, said that 75 billion zlotys ($21.4 billion) worth of state owned assets have been put aside for privatisation. He added that the overall book value of Treasury assets is 144 billion zlotys.

Ukraine: on 3 June, the State Property Fund agency said that it will sell a 26 per cent stake (40,540 shares) in AT Selma, a telecommunication equipment manufacturer with a face value of 0.05 hryvnias ($0.02) each, and a starting price of 1.84 million hryvnias.

Kazakhstan: on 10 June, President Nursultan Nazarbayev officially opened a new capital, Astana. The capital was moved last year from Almaty to Akmola, which is in the northern part of the country, and the name has been changed to Astana, which means ?capital÷.

Montenegro: Milo Djukanovic, leader of the Democratic Party of Socialists, was re-elected President of the small Federal Republic of Yugoslavia, receiving 95 per cent of the votes. His party warned that the President is likely to call a referendum on independence for Montenegro if Slobodan Milosevic continued to fuel Yugoslavia's constitutional crisis.

Poland: on 4 June, the Foreign Ministry welcomed the ratification by Iceland of the protocols on the accession of Poland, the Czech Republic and Hungary to the North Atlantic Treaty Organisation (NATO). Iceland is the eighth country to ratify NATO enlargement, with the protocols having already been signed by the US, Canada, Denmark, Norway, Germany, Greece and Luxembourg.

Standard & Poor's credit rating agency has reinforced its long-term credit rating of BBB for the Polish Government. The rating sheds a positive light on the fiscal policy of the new government, its reform programme and the increased inflow of foreign capital.

Serbia: on 8 June, the EU decided to ban investment in Serbia and call for acceleration plans for NATO-led military action, to prevent more fighting in the Serbian province of Kosovo.

NATO's 16 defence ministers met on 11 June in a bid to step up pressure on Yugoslav President, Slobodan Milosevic, and end the trouble in Kosovo. They were expected to announce air exercises in both FYROM and Albania.

Uzbekistan: on 9 June, Islam Karimov, President of Uzbekistan, urged regional governments in Central Asia to tighten border controls against the spread of religious fundamentalism.