The macroeconomic achievements of the Baltic states were praised by the conference participants. Bank of Latvia Monetary Policy Administration head Helmuts Ancans said that the Baltic states had recovered from the Russian crisis, which he described as "an unpleasantly cold shower," and have returned to the path of growth.
After certain fluctuations, the interest rates in the Baltics have become stable and depositors have regained trust in banks, he said.
Latvia will retain the peg of its national currency to the Standard Drawing Right (SDR) currency basket, a mixture of the U.S. dollar, euro and yen, until the country joins the European Union and introduces the euro, the president of the Bank of Latvia, Einars Repse, told reporters Oct. 10. "The unified currency for European countries is a positive thing and will release a lot of Europe's economic potential," Repse said.
The 1998 Russian financial crisis was an important factor stimulus to re-orient trade to the Western market, Ancans noted.
Investors have upped their investments in the Baltic states, and this positive trend is expected to continue, Repse noted.
Latvian Prime Minister Andris Berzins also noted the economic growth of the Baltic region. "A time when the Baltic Sea becomes an 'internal lake' of the European Union is not far away, and I am confident that the forecasts of experts will come true and the surroundings of the Baltic Sea will become the most dynamic region in the EU," Berzins said.
Bank of Estonia representative Marten Ross also noted positive macroeconomic development and positive trends in the Baltic states.
Next year Estonia should not be surprised to see a comparatively high inflation and a budget surplus, he said.
Lithuanian Finance Minister Vytautas Dudenas said that the economic situation in the country had improved in comparison to last year.
He expected increased competition in the Lithuanian banking sector and growing investments in the country in general.
Despite the good results, it is still a long road to the prosperity others have enjoyed for years. Some estimates say Latvia could reach the living standard of developed countries in some 30-40 years provided GDP growth exceeds 6 percent a year, Latvian Economics Minister Aigars Kalvitis said.
"It is clear that this goal can be attained by forming a competitive national economy, which is to be integrated into the world's economic system, by gaining the maximum benefit and reducing dangers that can be created by globalization and rapid development of technologies," Kalvitis said.
He stressed that Latvia's long-term development strategy has three main objectives, namely, creating favorable conditions for all branches of the economy, promoting creation of efficient and competitive structure of the economy as well as reduction of social stratification.
Kalvitis stressed that investment into the human resources, productivity, research and introduction of new technologies should be promoted particularly.
Before the Russian crisis Baltic banks had been active in the Russian market, earning a big chunk of their profits by buying Russian government bonds. All connections were broken off. Presently, the possibility of liberalizing the access of foreign banks to the Russian market and stimulating inflow of foreign capital into that country is being considered, Russian Banks Association President Sergey Yegorov said.
"Intentions are being expressed to stimulate the inflow of foreign capital, including as subsidiary structures of foreign banks," Yegorov said.
Presently, 22 banks with 100 percent foreign capital are operating in Russia, while a total of 27 banks have non-resident resources. The biggest non-resident investments into the Russian banks' share capital have been made by Austrian, U.S., German and Turkish investors.
At the end of June 2000, the banking capital in Russia had increased more than three-fold over the end of March 1999. Nearly 80 percent of the credit institutions had seen their capital growing.
Yegorov predicted that the Russian banks might restore their capital base by the end of the year.
The key issues for discussion at the conference were financial market issues in Central and Eastern Europe as well as corporate finances in the Baltics.
The conference was organized by Latvian Business School jointly with the Latvian Finance Ministry, Riga Stock Exchange and commercial banks associations of the three Baltic states.
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