Summed up

1999-09-30

KEEPING DEFICIT DOWN: Latvia will be considered one of the world's
"doubtful countries" by the World Bank, the International Monetary
Fund and foreign investors if it does not keep its fiscal deficit
below 2 percent of GDP, Prime Minister Andris Skele said last week. A
draft budget for 2000 envisions a 2 percent deficit, down from the
3.5 percent deficit sustained in 1999. Finance Minister Edmunds
Krastins said the draft budget will be forwarded to Parliament Oct. 1.

BAD LOANS: The share of loans not repaid on time increased in August
from the preceding month and made up 3.1 percent of the aggregate
loan portfolio of Estonian banks at the end of the month. The volume
of bad loans grew for the third successive month. The banks'
aggregate loan portfolio at the end of August totaled 23.57 billion
kroons ($1.57 billion), the Bank of Estonia said. Bad loans totaled
732.5 million kroons, up by 38.9 million kroons from the end of July.

EIB ASSISTANCE: Finance Minister Jonas Lionginas inked two loan
agreements with the European Investment Bank last week. The first, a
15 million euro ($15.8 million) loan, will be used to finance
municipal investment projects. An additional loan for 6 million euros
has been earmarked for reconstruction of water purification
installations in Panevezys, in central Lithuania. The EIB granted a
five-year grace period for the 20-year loans, the Finance Ministry
reported.

MEDIA SALE: AS Trio LSL, the owner of several FM radio stations in
Estonia, announced its interest in the state news agency ETA, which
is up for privatization. A spokesman from Trio said the company
became interested in the agency when it learned state radio Eesti
Raadio was planning to bid as well. "Since both Eesti Raadio and ETA
are owned by the state, or the taxpayer, the state would thus
transact a deal with itself and leave a wrong impression of the
entire privatization process," read a statement released by Trio. The
Latvian state news agency, LETA, has also declared its interest in
ETA.

EUROBONDS TO THE RESCUE: Latvian Finance Minister Edmunds Krastins
said the timing is right for issuing Latvian Eurobonds abroad. The
bonds will finance the country's budget deficit, Krastins said, now
that revenues from the privatization of large state industries have
been delayed. In May, at the time of the first emission of Latvia's
Eurobonds, the government expected supplementary revenue from
privatization. The new Eurobonds emission is needed, Krastins said,
to fill the gap. Latvia placed on the international market 75 million
euros' ($78.9 million) worth of Eurobonds with a 6.25 annual yield.
The bonds will mature on May 14, 2004.

IMF WARNS LITHUANIA: The International Monetary Fund has urged
Lithuania to tighten its fiscal policy by restraining the current
account deficit and reducing foreign borrowing. In its recent survey
of Lithuania, the IMF scaled down its growth forecasts, suggesting
the country's economy will expand by just 0.5 percent this year and
by 4 percent in 2000. This represents a change from the 2.5 percent
and 4.5 percent growth in GDP projected back in April. Growth
forecasts for Latvia and Estonia have been modified as well. Estonia
is expected to see GDP growth of 0.5 percent and Latvia of 2 percent,
down from 2.3 percent and 4 percent respectively.

NEW LINKS: Eesti Telefon will launch a direct Internet link to Sweden
in cooperation with the Swedish telecommunications company Telia
before the end of September. The direct connection with Sweden will
provide Internet users a higher-quality and more rapid Internet
connection and allow subscribers of the dial-up service to save on
per-minute costs, the Estonian telephone company said. The new link
is possible thanks to a nearly 250-kilometer long underwater optical
cable between the Tahkuna peninsula on Estonia's western island of
Hiiumaa and the Swedish coastal town of Stavsnas.

GAS PRICING: Some 60 percent of the Lithuanian population believe the
privatization of the country's oil complex will mean higher gasoline
prices, according to a poll released by the Veidas magazine. Almost
22 percent of those questioned said gasoline prices would not change,
14.5 percent said they had no opinion on this issue, while 4.5
percent said they expected a drop in prices. People, however, have
different opinions as to whether Williams' arrival in Lithuania is
necessary. More than a quarter of respondents (27.4 percent) backed
the government's plans to sell Mazeikiai Nafta to the Americans,
while 16.9 percent said it should be sold to Russia's LUKoil. Some
22.3 percent said the state should retain control.