Books on Lithuania
Independent between the two World Wars, Lithuania was annexed by the USSR in 1940. On 11 March 1990, Lithuania became the first of the Soviet republics to declare its independence, but this proclamation was not generally recognized until September of 1991 (following the abortive coup in Moscow). The last Russian troops withdrew in 1993. Lithuania subsequently has restructured its economy for eventual integration into Western European institutions.
Update No: 279 - (23/03/04)
The Lithuanians are bedevilled right now by a major scandal. It could not have come at a worse time, just when they are about to enter both NATO on April 2nd and the EU on May 1st. Their president, Rolandas Paksas, is being impeached by parliament for transgression of the law. A stunt pilot in his spare time, he is not going to retire without a fight.
The supposed misbehaviour is to have been too involved with a leading local Russian businessman Yuri Borisov, who allegedly helped to finance his presidential campaign. One could get away with such a connection if one was president of Belarus next door, but not as president of a Baltic state, even the least Russophobic of them Lithuania.
Following a damaging report by the Lithuanian Department of State Security, the press mounted a campaign in the autumn that his office has had extensive links with organized crime, notably Russian ones. Four of the counselors in his office had to resign. Now he is under strong pressure to resign himself. Indeed, impeachment proceedings are already under way in parliament. A parliamentary commission prepared a report for December 1st, which confirmed various devastating allegations, at least sufficiently to justify him stepping down. If he does not, the impeachment process will gather momentum.
The investigating committee reported that the 47-year-old president was responsible for leaks of sensitive information and that he had allowed Almax, a public relations firm suspected of links to Russian intelligence, to influence his decisions. The likeliest outcome is that Paksas goes before the impeachment process goes its full course.
Lithuania places 600m in bonds
On February 27th Lithuania began placing 600m worth of nine-year Eurobonds, the country's finance ministry said, the Baltic New Service reported.
The banks Citigroup and UBS are the issue underwriters, the ministry said. Ministry representatives will launch a road show for the issue, visiting London, Amsterdam, Zurich, Frankfort-am-Main, Athens, Helsinki and Copenhagen. The Lithuanian government plans to use the funds raised with this Eurobond issue to redeem paper placed earlier, refinance loans and cover the country's budget deficit. Moody's has given Lithuania an A3 long-term borrowing rating. Standard & Poor's an A-rating and Fitch a BBB+ rating. Lithuania currently has 400m worth of 10-year Eurobonds in circulation, 200m in seven-year Eurobonds. The country plans budget revenues for 2004 at 11.806bn litas and spending at 13.668bn litas, for a deficit of an expected 1.862bn litas (or 13.6% of spending).
Fitch affirms Lithuanian bond rating at BBB+
Fitch Ratings, the international rating agency, recently affirmed the rating of Lithuania's reopened 4.5% Eurobond with maturity in 2013 at long-term foreign currency BBB+, New Europe reported recently.
The republic has priced at 600m increase, taking the bond to 1bn. The outlook on the long-term foreign rating remains positive, Fitch said in a press release. Since recovering from the aftermath of the 1988 Russian crisis, Lithuania has followed a determined economic policy, with fiscal consolidation as a central objective, and achieved a consistently brisk rate of growth, officially estimated at 8.9% last year. In recent years, the country has also maintained low inflation; in fact, prices fell in 2003. The current account deficit has been readily financed by foreign direct investment.
S&P ups Lithuania long-term foreign currency ratings
Standard & Poor's (S&P) Ratings Services has raised its long-term foreign currency ratings on Lithuania to A- from BBB+, the agency said in a recent press release, Interfax News Agency reported.
At the same time, S&P affirmed its A- long-term local currency and A-2 short-term local and foreign currency ratings on Lithuania. The outlook is stable.
"The upgrade reflects S&P's expectation that fiscal deficits and the debt burden will remain low and stable in the foreseeable future, as well as Lithuania's solid medium-term economic prospects, with GDP growth rates forecast to be the highest among EU acceding countries," said S&P's credit analyst, Kai Stukenbrock.
"Weak external liquidity and a relatively low level of wealth remain key constraining factors for the ratings."
The equalisation of the local and foreign currency ratings reflects S&P's belief that Lithuania is firmly on track to join EMU. The country is expected to join the Eurozone by 2007 or 2008 at the latest, which will minimise the potential negative impact of balance-of-payments pressures and the country's external debt position. The general government deficit is expected to rise to 2.8% of GDP in 2004, from 1.5% in 2003.
EU accession will bring budgetary pressures this year, as will the pension reform that came into effect earlier this year. However, the deficit should decline again thereafter, to about 2% of GDP by 2006 and 2007. General government debt will remain low, reaching 24% of GDP (excluding guarantees) in 2007, marginally up from 22% in 2003. On the back of significant progress in structural reforms, robust and sustainable economic growth of 5-6% is expected over the medium term, which will support fiscal discipline.
Lithuania's export performance and competitiveness have remained buoyant throughout the cyclical downturn in global demand. As a result, current account deficits will remain in the range of 5-6% of GDP. A substantial proportion of this will remain covered by foreign direct investment. Nevertheless, the gross external financial gap remains very high. As two thirds of reserves back the monetary base under Lithuania's currency board arrangement, flexibility in addressing balance-of-payments pressures is limited.
Over the medium term, improvements to Lithuania's creditworthiness will be driven by a continuation of the economic restructuring process, together with the maintenance of a prudent fiscal stance and sustained real economic convergence with high-rated sovereigns. Significant policy slippage, however, could undermine Lithuania's growth prospects and jeopardise early EMU entry, thereby exerting downward pressure on the ratings.
"The authorities are expected to continue steering a prudent fiscal course, aware that sound public finances are needed to maintain the country's current account deficits at a sustainable level, avoid balance-of-payments pressures, and underpin the currency board's creditability," Stukenbrock said.
Klaipedos Nafta exports up 39% in January-February
Lithuanian oil terminal Klaipedos Nafta increased oil product exports 38.7% from 1.15m tonnes in January-February last year to 1.59m tonnes in the same period in 2004, Andrius Betingis, from the company's marketing department, said, Interfax News Agency reported recently. The terminal transshipped 819,400 tonnes of oil products in February, compared with 637,500 tonnes in February 2003. Klaipedos Nafta exported 6.6m tonnes of oil products in 2003, down 1.3% from 2002. YUKOS-managed Mazeikiu Nafta is one of the largest exporters through the terminal and accounted for 52.48% of total volume last year. About 20.5% of volume is accounted for by oil products being transported from Russia to the West, and 26% - oil products from two Belarussian oil refineries.
MINERALS & METALS
Gold, forex reserves shrink 1.7% in January
Lithuania's gold and foreign-exchange reserves edged down 1.7% to 9.367bn litas in January, the Bank of Lithuania said, Interfax News Agency reported recently.
The reserves fell because commercial banks bought 246.5m litas in foreign currency more than they sold to the Bank of Lithuania. The reserves grew 19.3% or 1.539bn litas to 9.528bn litas in 2003. The lita is pegged at 3.4528 litas against the Euro.
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