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The amendment, passed last March, has limited Lithuanian companies to borrowing from banks or other sources by issuing promissory notes. Since a $50 million U. S. fund to the three Baltic countries, known as the Baltic American Enterprise Fund, does not fit within this definition, its lending activities have been halted.
Donald Pressley, head of USAID's Bureau for Europe and New Independent States, said the fund, established in 1996, was intended to beef up Lithuania's private sector. Over a period of almost two years, the fund lent $10.8 million to Lithuanian businesses and private borrowers.
"Currently no loans [from the Baltic American Enterprise Fund] can be made in Lithuania," said Pressley. "This has meant lower investments and fewer jobs created. The consequence of this legislation is funds that could be lent to Lithuanian companies are now, unfortunately, being shifted to Latvia and Estonia where no such restrictions exist."
USAID assessed that approximately 500 jobs could have been either saved or created had the fund been allowed to function freely. Since March, the lending of $3.5 million has been blocked. Pressley, however, was not entirely discouraged with the situation. He remarked that President Valdas Adamkus and the Lithuanian Parliament are making strides to resolve the problem.
"I understand the president's office drafted amendments to the law on companies that would address this problem," said Pressley. "And there was an amendment drafted by an MP that was registered last week. This to us is an example that there is very good will and a positive reaction to dealing with this problem."
Deputy Chairman of Parliament Feliksas Palubinskas told TBT the situation could be resolved before Parliament breaks for the Christmas holidays.
"A proposal has been submitted in Parliament which would eliminate this oversight," said Palubinskas. "Basically, it would permit enterprises to make financial arrangements with non-profit agencies [financed by international agencies or a government]."
Away from the Enterprise Fund issue, Pressley was no wet blanket. He announced [America's relationship with Lithuania] is shifting away from aid to one based on "trade, investment and mutual cooperation on a broad range of issues." Kind words were also offered for Lithuania's efforts to improve the tax and legal status of NGOs. Pressley labeled Parliament's hearing on the law on charity "a model of leadership" which other countries in the region will follow should the trend continue.