• 2001-11-22
BULLISH FORECASTS: In its recently published World Economic Outlook the International Monetary Fund predicts continued strong growth for the economies of all three Baltic countries, with Latvia expected to record the fastest growth at 6 percent this year and next. Estonia will have the biggest current account deficit and see the biggest rise in consumer prices in 2001 and 2002, the fund predicts. Estonia's economy will grow 4.5 percent in 2001 and 5 percent in 2002 and Lithuania's 3.6 percent this year and 4.7 percent next year. The IMF forecasts Estonia will have a 7.2 percent current account deficit in 2001 and a 6.8 percent deficit in 2002. Latvia's current account deficit will be 6.3 percent this year and 5.8 percent next year. Lithuania's current account deficit will be 6.7 percent this year and 6.6 percent next year. Estonia's consumer price index will rise by 5.7 percent this year, Latvia's by 2.3 percent and Lithuania's by 0.6 percent. In 2002, the IMF forecasts Estonia's consumer price index will rise 3.8 percent, Latvia's 3 percent and Lithuania's 2.8 percent. The fund notes that the budget deficits of all the three Baltic countries have been sharply reduced in the past two years, contributing to reductions in the countries' current account deficits. In the medium term it says the key challenge is to consolidate this progress while meeting higher expenditure needs for EU accession as well as pension reform.

FAKE WINES GO CHEAP: Estonian shops are knowingly selling adulterated wine under Georgian trademarks, according to an Estonian newspaper. "Of course I know these are not genuine Georgian wines," Igor Onenko, development director of the supermarket chain Tallinna Kaubamaja's Selver, told the daily Eesti Paevaleht on Nov. 19. "It's all the same to me whether they are genuine or not. The main thing is that they sell well and earn money for us." Onenko said people willingly buy sham Georgian wines because they are cheap. "Kindzmarauli and Khvanchkara are made in such small quantities that there's not enough of them even for Georgia, but at the same time the whole eastern bloc and the former Soviet Union are flooded with them," he said. Selver's shops buy the sham Georgian wines from wholesalers Dekanter and Lukeren. "We import Kindzmarauli and Khvanchkara from Bulgaria," a Dekanter product specialist said. "They take advantage of the Georgian trademarks and so do we. Georgia should make them toe the line because the product is absolutely adulterated."

MONEY RAILS: The board of directors of the International Finance Corporation, the World Bank's financing arm, approved a $50 million loan application by the Estonian railway company Eesti Raudtee. Talks are continuing on the loan documents, a spokesperson for the recently privatized freight arm of Estonia's rail system said. Most of the money will be spent on upgrading the fleet of locomotives and on investment in infrastructure. The IFC loan is essential for the future of Eesti Raudtee because replacement of its locomotive fleet and overhauling infrastructure are intrinsic to the company's business plan, said Eesti Raudtee Chairman Earl Currie. The total cost of the project is estimated at $3.85 billion, of which $57 million are to come from Baltic Rail Services, recent buyers of a 66 percent stake in Eesti Raudtee.

CHEAP FUEL: Retail fuel prices in Lithuania have dropped to their lowest levels this year. Mazeikiu Nafta, the country's sole crude oil refinery, has been cutting wholesale prices of its products in line with trends in global markets. Since mid-September, retail gasoline prices have declined by 0.38 litas ($0.095) per liter on average, and diesel fuel prices by around 0.20 litas per liter. On Nov. 15 the lowest retail price for A95 gasoline, the most popular grade in Lithuania, was 2.12 litas per liter, down from the previous record low of 2.23 litas set at the start of this year. The lowest price for diesel fuel was 1.77 litas, compared to the previous record low of 1.79 litas in April. Mazeikiu Nafta, which has been lowering prices for A95 gasoline since Sept. 19, was selling it for 2,420 litas per ton or 1.82 litas per liter on Nov. 15. The price of diesel fuel, which has been tumbling since Sept. 25, was 1,740 litas per ton or 1.45 litas per liter. Tadas Augustauskas, head of the company's information service, predicted that crude oil prices would decline somewhat in the coming week, so oil product prices should go down as well.

STORK COINS: The Bank of Latvia will issue this year a new one-lat coin decorated with a picture of a stork, said a central bank official. The new coins will be used as a legal tender alongside existing one-lat coins on which a salmon is depicted, said Maruta Brukle, who is in charge of the bank's coin unit. The new coins will be put into circulation this year although an exact release date has not yet been set. Brukle said the Bank of Latvia wanted to offer the population something new and widely available, bearing in mind the high price of special-issue and memorial coins. She said, however, that there would not be too many stork-bearing coins in circulation as Finland's Rahapaja Oy mint would make only 250,000 of them for Latvia. In early October this year there were a total of 8,331 million one-lat coins in circulation in Latvia. The Bank of Latvia chose to put a stork on the new coins as the bird has great symbolic meaning in both Latvian folklore and mythology, explained the official.

LATE FINE: Latvia's Competition Council imposed a 3,500 lat ($5,500) fine on Latfood, the largest potato chip producer in Latvia, saying it had abused its dominant position on the Latvian market. Council chairman Peteris Vilks said the fine amounted to 0.1 percent of the company's net sales in 2000 and would be transferred to the state budget. The competition council ruled early in July, based on a complaint by Transko company, that Latfood had violated the competition law. The council found that Latfood in 1999 exerted pressure on potato-chip traders to reduce sales of competing products. The company had signed agreements with shops by which they agreed not to sell the products of their competitors. Latfood, which has so far not commented on the decision, is owned by AB Chips Oy of Finland and sells chips under such trademarks as Adazu Cipsi and Taffel. In 2000 Latfood lost 430,000 lats on sales of 3.46 million lats.