LATVIA

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Area (sq.km) 
64,589

Population
2,348,784

Principal 
ethnic groups 
Latvians 52.0%
Russians 34%
Belarusians 4.5%

Capital 
Riga

Currency 
Lats

President
Mrs Vaira 
Vike-Freiberga

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Update No: 287- (29/11/04)

Pro-Russian Politician to become Latvian Prime Minister
Vice Premier and Minister of Transportation and Communications Ainars Slesers claimed his readiness to head the Latvian cabinet of ministers at a press conference on November 9th. Businessman, millionaire and active politician Slesers, former Latvian Minister of Economy, came out for the development of friendly relations between Russia and Latvia and the increase of bilateral trade turnover.
Mr. Slesers heads the centrist First Party in the Latvian parliament. Its members discussed the formation of the new cabinet with other factions.
After the failure of the draft budget in the first reading the Latvian government had to resign on October 21, 2004.
The formation of a new government is a key topic of discussion across Latvia. However, the coalition has not been set up yet. According to experts, the new Latvian government will be right-wing.
From February 5 to October 21 the cabinet of ministers was the centre-leftist government of the minority supported by the so-called Russian-language parties For Human Rights in United Latvia and the Party of People's Accord.

Latvia hosts largest ever Belarusian exhibition
Latvia cannot ignore its large neighbour, Belarus, four times its size in population and territory, despite its unsavoury political leadership in the regime of President Alexander Lukashenka, just made head of state in perpetuity in a dubious referendum. A Belarus economy forum (officially referred to as Days of Belarusian Economy in Latvia) was held in Latvia on November 4th-7th. The focal point of the forum - BelarusEXPO '2004 exhibition, featuring products by over 100 Belarusian enterprises and associations - has been recognised the biggest one in its history, reported Councillor Vera Skvortsova, who supervises trade-and-economy matters in the Belarusian Embassy in Latvia.
In her words, the 5th BelarusEXPO '2004 exhibition was attended by around 40,000 visitors.
As reported by Ms Skvortsova, the present-day exhibition was arranged with the preferences of Latvian business in mind. In particular, the expo featured a wide array of agricultural machinery. Besides the traditional machinery by Minsk Tractor Plant (MTZ), this year visitors could see products by Gomselmash, Lidselmash and several other producers of agricultural equipment.
Ms Skvortsova also stated that at the exhibition they presented the first Latvian-assembled MAZ truck. Hence, the project to assemble trucks in Latvia from MAZ kits on the premises of the Latvian MAZ Service Centre has been successfully implemented. There they are planning to assemble around 100 MAZ trucks a year.
Besides, the forum saw a series of co-operation agreements signed. In particular, Belarus and Latvia completed forming a legal base in the sphere of standardisation, metrology and certification by signing three co-operation agreements, Ms Skvortsova said. 
Moreover, the parties signed a technology transfer agreement to enable scientists from Belarus and Latvia to get access to the European Union's structural technology fund. On the whole, exhibitions and forums like this contribute to trade- economic contracts between Belarus and Latvia, she said.
Over January-August 2004 the bilateral turnover totalled US$268.7 million, 2.7% up on the year. Belarusian exports shrank 9.9% after the 2003 redistribution of oil traffic between foreign operators. Imports doubled to US$56.6 million. Belarus enjoyed a positive of balance in trade with Latvia at US$155.4 million.
The bulk of Belarusian exports to Latvia are crude and petrochemical products (53.7%). Other important imports are timber and wood products, mineral fertilisers, pre-fabricated steel, tractors and lorries.
In 2003 Latvia invested in Belarus' economy US$22.5 million. Latvia is among Belarus' ten largest investors, as far as direct foreign investments are concerned - US$4.7 million. 

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FOOD & DRINK

DBG strengthens Baltic position

The Danish Brewery Group (DBG), Denmark's second largest beermaker, has strengthened its position in the Baltic markets through the acquisition of a controlling stake in Lacplesa Alus, Latvia's number three brewer, Beverage Daily reported recently.
DBG will pay 3.7m Euro for an 83.5 per cent stake in the Latvian firm, including the assumption of more than two million Euro of debt and will gain around 11 per cent of the 1.5 million hectolitre Latvian beer market as a result. Lacplesa's sales this year are expected to be around six million Euro, mostly from its premium brand Lacplesis, which has a large following in the horeca (hotel, restaurant, catering) sector.
The takeover of Lacplesa will consolidate DBG's position as the second largest beermaker in the Baltic States after Baltic Beverages Holding, the joint venture between Scottish & Newcastle and Carlsberg which owns four beermakers in the three Baltic countries. The move into the Baltic region is part of DBG's restructuring plan, called V8, which has also seen the closure of a number of breweries in more mature markets in western Europe.
Although DBG has been active in the Baltic countries since 1999, when it acquired Lithuanian beermaker Vilniaus Taurus, its development there has been relatively slow. The company's Lithuanian market position was strengthened by the 2001 takeover of Kalnapilis (bought from BBH), while earlier this year the group took its first steps into the Latvian market with the purchase of soft drinks maker Cido Partikas.
DBG said that Lacplesa had lost market share in recent years because of a lock of investment, but the merging of some operations with those of Cido Partikas will help cut costs at the premium beermaker. The soft drinks group also has a strong position in the horeca sector, allowing the two businesses to share transportation and marketing costs and sales forces.
Purchasing and production costs at the Latvian brewer are also expected to come down as it collaborates with the Kalnapilio-Tauro group (as the two Lithuanian breweries are now called). DBG is also present in Poland, where it produces its Faxe brand at a brewery in Poznan. Sales for the Baltic and Polish businesses reached 322,000 hectolitres in the first half of 2004, up 2.3 per cent on the previous year, although value sales were 7.3 per cent lower at 109 million Danish crowns as a result of currency fluctuations. Kalnapilis in particular has proven to be a major driver of growth for DBG, with the company's sales in Lithuania up 4 per cent in the first half, well ahead of the market as a whole, as a result of a revamp of the Kalnapilis brand.

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FOREIGN LOANS

Latvia to borrow €150m

Latvia plans to borrow €150m (100.6m lats) from the European Investment Bank (EIB) to co-finance 2004-2006 projects funded by the European Union (EU), Finance Ministry's press secretary Baiba Melnace told LETA recently. Local governments that implement EU-funded projects will be able to borrow the necessary funds from the state treasury. A delegation of EIB representatives recently visited Latvia to appraise projects implemented with the help of EU structural and cohesion funds and the projects' compliance with the bank's priorities. The EIB's proposal is advantageous to Latvia, Melnace was quoted as saying. Latvia's talks with EIB on using the bank's resources started at end-2003. Latvia accepted EIB's proposal. The EIB delegation met with leading specialists at finance ministry, environment ministry, transport ministry, economy ministry and state treasury.

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