Summed up

  • 1999-10-07
FRENCH MONEY FOR ESTONIA: Emerging Europe Asset Management Ltd., a
new markets investment fund of French bank Societe Generale, has set
up the SG Convergence Fund with 150 million euros ($156.25 million).
The fund is registered in Dublin for investments in countries
engaged in European Union entry talks while the price of securities
is low. The new fund will buy Estonian, Polish, Hungarian, Czech and
Slovenian shares, Dow Jones reported.

LOWER DEFICIT: The International Monetary Fund wants Lithuania to
reduce its fiscal deficit to 2 percent to temporarily halt the
government's lost savings compensation scheme and curb state
borrowing next year, the Lithuanian Finance Ministry said Oct. 1. The
fund's representatives made the recommendations during talks with
Lithuanian officials in Washington. The IMF and Lithuania are
preparing to sign a standby agreement for 15 months. Finance Minister
Jonas Lionginas said the IMF was also pressing the government to
limit its investment programs to 100 million litas ($25 million) next

RATES ON THE RISE: Uncertain macroeconomic prospects have driven up
rates on the Latvian and Lithuanian interbank markets this week while
interest rates in Estonia remained unchanged. Experts noted a surplus
of funds on the interbank financial markets with rates up because
most of the market participants did not want to loan the money in the
local markets now. The interest rates grew most in Lithuania with
daily rates at 16 percent per annum and semiannual interbank credits
offered at 20 percent. The price for money on the Latvian market now
is the highest since last November. As of Oct. 1, the daily interbank
rates in Latvia were 7.5 percent to 8.5 percent, twice as much as a
month ago.

HEAT DEAL ON BACK BURNER: A loan deal between the heating company
Tallinn Soojus and the Nordic Investment Bank was delayed pending a
blessing from the Estonian Finance Ministry. The Tallinn
municipally-owned heating utility wishes to borrow 5 million euros
($5.20 million) from NIB for 10 years. The city government has
endorsed the loan plan to upgrade heating networks in Tallinn, but
the Finance Ministry said it does not have enough information yet.

LESS OIL: The flow of oil through the Lithuanian pipeline system
slowed down over the first nine months of this year as compared with
the same 1998 period, the Birzai-based transportation company
Naftotiekis reported. The company, which is part of the Mazeikiu
Nafta oil complex, said it pumped 15.3 percent less oil to the
Mazeikiai-based oil refinery this year, while deliveries to the
Latvian port of Ventspils increased by 3.9 percent.

AUDITOR SEEKS CRASH CULPRITS: Juhan Parts, Estonian state auditor,
asked the Parliament last month to investigate the bankruptcy of
Maapank. "The sad story that cost the state hundreds of millions of
kroons is not finished yet," said Parts. The Finance Ministry
deposited in Maapank 20 million kroons ($1.33 million) as late as
June 6, 1999. The state deposited also large amounts of pension funds.

Privatization Agency has ordered the state trustees in the shipping
company Latvijas Kugnieciba to assess the intent to order tankers.
The Latvian shipping company asked the board of the LPA to authorize
the company's state trustees to approve a contract by Latvijas
Kugnieciba with the South Korean shipyard Hyundai Heavy Industries
Co. on building two new oil tankers with an option for four more. The
contract must be signed by Oct. 22. The shipping company's president,
Andris Klavins, said the shipping company will cover 30 percent of
costs and borrow 70 percent from banks. LK currently is in the
privatization process, with bids closing Dec. 20.

MILK PRICE RISES: A seasonal shortage has caused Estonia's major
dairies to raise milk prices Oct. 1 by 10 percent to 25 percent.
Lacto, in central Estonia, upped the price from last month's 2 kroons
($0.13) to 2.5 kroons per kilo. Uhinenud Meiereid, which purchases
milk in southern Estonia, will add 0.2 kroons to the per kilo price
of high-grade milk, bringing it to 2 kroons. The price of grade A
milk will rise to 2.1 kroons.

THUMBS UP ON MERGER: The Competition and Consumer Rights Protection
Service ruled Oct. 1 that Vilniaus Bankas may buy up to 100 percent
of shares in Bankas Hermis. The unified bank will have some 32
percent of the loan market, around 34 percent of the sector's
deposits and letters of credit and some 33 percent of securities
trading. The merger, the service said, will enable the banks to
withstand growing international competition and accelerate
consolidation of small commercial banks. The Bank of Lithuania
approved the merger between Lithuania's two largest banks Sept. 16.