Observer "Lietuva"

WEEK 21st

Saturday, 22nd of May

Another month for EU subsidies
The European Commission has agreed to extend the deadline for Lithuanian farmers to apply for EU subsidies from June 1 to July 1 amid fears that a significant part of the EU aid funds may remain untapped, the Prime Minister Algirdas Brazauskas announced on Friday.
According to data from the Agricultural Information and Rural Business Centre, there are over 250,000 farmers eligible for direct subsidies in Lithuania.
Farmers who fail to file their applications in time will lose entitlement to direct subsidies. This means that a significant part of LTL 623.4 million of the EU and Lithuanian budget funds, earmarked for 2004, may remain untapped.
There are 2.288 million hectares of good quality agricultural land in Lithuania.
Kauno Diena, Lietuvos Zinios

Prime Minister promises bigger budget for 2005
Revenues of Lithuania's national budget of 2005 should rise by more than one-tenth, with the European Union (EU) assistance to Lithuania, incorporated in the budget, to reach almost LTL 3 billion. Moreover, the budget of the forthcoming year will focus on the social sector.
"The budget, including the European Union assistance, will grow by 12 percent, exceeding LTL 15 billion, which will include LTL 2.8 billion in EU funds," Prime Minister Algirdas Brazauskas said at Friday's news conference.
The revenues of the central budget of 2004, as approved by the parliament, total LTL 11.806 billion, a 23.6 percent rise from 2003. Actual revenues of the national budget are expected to reach LTL 13.454 billion (an increase of 21.2 percent).
Meanwhile, expenditures of the central budget should rise by 25.8 percent, year-on-year, to LTL 13.668 billion and the expenditures of the national budget should total LTL 15.316 billion this year.
Kauno Diena, Lietuvos Rytas, Lietuvos Zinios

Traders reject Prime Minister’s accusations
Traders reject the accusations that they have raised prices of food products groundlessly. The heads of Iki chain declared on Friday that the trade mark-up has not been raised in the trade centres of the chain. Aidas Mackevicius, the finance director of Iki chain, said the price analysis has shown that prices of some food products have increased due to growth of grain and flour prices, new hygiene and veterinary requirements of the European Union and a new VAT.
Representatives of VP Market trade chain ground the price rise similarly.
After Lithuania’s accession to the European Union, prices of some products have reduced, e.g. coffee, chocolate, cookies, beers and many imported alcohol beverages have become cheaper.
Lietuvos Rytas

Friday, 21st of May

Privatisation panel approved Anyksciu Vynas deal
Lithuania's privatization panel gave a nod to draft contract on purchase and sale of 72.93 percent stake in Anyksciu Vynas (Anyksciai Wine or AV), the largest Lithuania's wine producer. The price paid for the block of AV shares implies that the alcohol company Alita might also have attracted a bigger group of potential buyers and might have received a better offer if the State Property Fund (SPF) had announced another tender for its privatisation.
SPF launched talks with Alita, the winner of the tender on privatization of Anyksciai-based winery, in early April. According to unofficial sources, Alita bid the highest price - approximately LTL 25 million for the stake in Anyksciu Vynas.
The deal of AV privatisation will be completed only after the Competition Council announces its verdict. The competition body is analysing the market concentration to result from the merger of two alcohol companies.
Alita will use its own funds and the credit taken from Hansabankas to pay for Anyksciu Vynas
Lietuvos Rytas, Verslo Zinios

Leasing portfolio surpassed LTL 3 billion
The leasing portfolio of the Lithuanian Leasing Association’s members amounted to LTL 3.028 billion in April 2004. It has increased by LTL 331 million or 12.3 percent since the beginning of the year, the Lithuanian Leasing Association reported on Thursday.
The sum of the new leasing contracts signed over four months of this year stood at LTL 795.7 million, a 57.37 percent rise year-on-year.
The companies of Lithuania use the funding of leasing companies in order to boost investments in technological equipment, motor vehicles and real estate. The demand for domestic power appliances, consumer goods and computer technologies has been growing as well.
Verslo Zinios

Company purchased arena’s name
The universal arena in Vilnius, the construction of which is expected to be wrapped up shortly, has been given the name of global electronics concern Siemens on Thursday.
Siemens acquired the right to use the name of the concern for the arena for a 10-year period for approximately LTL 9 million.
The list of aspirants vying to have the arena christened under their name also showed two unnamed Lithuanian companies - a beer producer and an IT developer.
Siemens Arena, which will be opened in autumn, will house sports, leisure and business events of international level.
Investments into the construction of the arena, excluding the arrangement of road infrastructure and communications, will exceed LTL 65 million.
Lietuvos Zinios, Verslo Zinios, Lietuvos Rytas

Thursday, 20th of May

Traders do not take the blame for price boom
As the prices of fuel of consumer goods are rising, people suffer a new shock nearly every day. Prices of al the main food products – bread, milk, meat ad sugar – have already increased. The prices of wood have soared by 25 percent since autumn. There are rumours that prices of clothing, footwear and other industrial goods will rise as well.
0.9 percent inflation is forecasted in Lithuania for May, i.e. the biggest leap of inflation since January 2002. Presumably, the prices of food products and health care and transport services will increase the most – by 1-2 percent – this month.
The Prime Minister Algirdas Brazauskas declared that the price leap is the speculation of traders and their wish to take advantage of the current situation. Following this declaration, the Competition Council has launched an investigation in order to find out whether traders have made a cartel agreement on the price rise.
Meanwhile traders categorically reject the accusations and claim that the price rise is related to the EU accession and other market factors.
Respublika, Verslo Zinios, Lietuvos Rytas, Kauno Diena

Trade chains can undertake alcohol wholesale
On May 19 the Government of Lithuania reduced the levy for issuance of alcohol beverage wholesale licences from LTL 80,000 to LTL 10,000. The minister of economy Petras Cesna forecasts that this will enliven trade and will boost the assortment of alcohol beverages. In his opinion, the reduced levy is the most favourable to the cafes and restaurant chains that from now on will be able to purchase alcohol beverages directly from the suppliers.
Wholesalers forecast that the reduced levy will strengthen competition among the big alcohol distributors but the prices of alcohol beverages should not change much.
Verslo Zinios, Lietuvos Rytas

Buyers choose cider more often
Cider and light alcohol cocktails are gaining popularity in the Lithuanian market.
The biggest vodka and wine producers in Lithuania – Stumbras, Alita, Anyksciu Vynas – and the brewers Svyturys-Utenos Alus and Kaunas-based Ragutis offer alcohol cocktails and cider. Consumers can choose the imported cider as well.
The Lithuanian Food Industry Association reports that Alita sold 5.2 thousand dal of cider in the first quarter of this year, a 4 percent rise year-on-year, while Anyksciu Vynas sold 2.2 thousand dal of cider or 22 times more than in the first quarter of 2002.
Demand for Kiss cider produced by Svyturys-Utenos Alus increased 6.2 times: the company sold 40.06 thousand dal of cider during the given period. Kiss occupies some 30 percent of the Lithuanian cider market at present.
Ragutis does not announce the production data.
The Lithuanian beer market increased 2.7 percent in the first quarter of this year, i.e. less than in the previous years.
Lietuvos Rytas

Wednesday, 19th of May

Best brands have been chosen
Kraft Foods Lietuva, the largest Lithuania's confectionery producer, scored a victory in the first Baltic competition Baltic Brand of the Year. The brand of Karuna, which vied for the award in the competition, has been voted the best in Lithuania and assigned the title of National Brand of the Year, one of four main awards. Moreover, Karuna, a brand of chocolate, has been singled out as the best brand in Lithuania and the Baltic countries in the category of foodstuffs.
Labas, a brand of UAB Bite GSM, has been elected the best brand of the IT sector. The brands Eesti Uhispank (Estonia), Aldaris (Latvia) and Lietuvos Telekomas (Lithuania) won the special prizes of the contest’s partners Clear Channel company and The Baltic Times weekly for the outdoors advertising.
The biggest internet portal in the Baltic countries Delfi has been elected the best brand in the mass media category.
The biggest financial group in the Baltic countries Hansabankas won the award of the best Baltic brand of this year. The evaluators said this brand’s was represented equally in all the Baltic countries.
Lietuvos Zinios, Verslo Zinios, Lietuvos Rytas

Rise of fuel prices will not stop
Increasing oil prices in the global markets have raised the fuel prices in Lithuanian gas stations to the record heights. On Monday, the price of the most popular 95 petrol increased to LTL 2.78/l, while the price of diesel fuel soared to LTL 2.47/l.
Petrol prices in Lithuania have approached the record registered in early summer of 2000. Then, a litre of 95 petrol cost LTL 2.8.
The prices of diesel fuel in Lithuanian gas stations have never been so high before. They are growing also due to the Lithuania’s commitment to the European Union to raise the fuel excise on the annual basis.
Representatives of Neste Lietuva, the company operating gas stations, and the oil refinery Mazeikiu Nafta, forecast that fuel prices will continue growing in the country.
Lietuvos Rytas, Respublika, Lietuvos Zinios

Constructions market grows
Lithuanian builders carried out construction work for a total of LTL 662 million during the first quarter of 2004, a 24 percent increase over the same period last year, the Statistics Department has reported.
The construction works carried out in the country this year are estimated at LTL 650 (98 percent of all works), last year the construction works were estimated at LTL 533 million.
New construction comprised 46 percent of total construction works carried out in the January-to-March period. Reconstruction accounted for 28 percent, repairs - 23 percent, other works - 3 percent of the total figure.
Moreover, 44 percent of construction works were concentrated in the region of Vilnius, 18 percent - in Kaunas, 12 percent - in Klaipeda.
Verslo Zinios

Tuesday, 18th of May

Foreign banks come to Lithuania
The Austrian bank Raiffeisen Zentralbank Oesterreich Aktiengesellschaft and the British bank HSBC Bank plan to use the directives of the European Union and to start activities in Lithuania.
The Bank of Lithuania has received the reports of the Austrian and British institutions supervising credit companies about the intentions of the abovementioned banks to use the right existing in EU to freely provide services and start their activities in Lithuania.
The banks will be able to provide services in Lithuania without establishing a subsidiary in the country.
Lithuanian commercial banks also have a possibility to provide financial services in EU countries.
Lietuvos Rytas, Verslo Zinios

Outdoors advertising market will grow thanks to the elections
Outdoors advertising area increased by 42 percent in the first quarter of this year compared to the relevant period last year. The heads of companies forecast that the outdoors advertising market will grow 10-15 percent due to the commercial advertising and will increase by another 15-20 percent due to the upcoming two elections this year.
Telecommunications, cloth and refreshing beverage sectors have been most active with regard to the outdoors advertising lately. Presumably, the sectors of finance, construction and decoration, tourism and retail will be the most promising in future.
The turnover of JCDecaux Unicome Lietuva increased 30 percent in the first quarter of this year. In 2002 and 2003, the company’s turnover stood at LTL 16 million. Relying on the data of TNS Gallup, the company controls 66.8 percent of the outdoors advertising market.
Verslo Zinios

Sugar consumption increased
Consumption of Lithuanian sugar increased on the eve of Lithuania’s membership in the European Union. 24,000 tons of sugar were purchased in four months of this year, a 9.1 percent rise year-on-year.
7.4 thousands tons of Lithuanian sugar were sold in April, during the sales boom of sugar and other non-perishable products, a 15.6 percent rise year-on-year.
56,000 tons of sugar were exported from Lithuania in four months of this year, or 10.8 times more than over the relevant period last year.
In order to evade EU fines for surplus sugar reserves, the government allocated LTL 50 million compensations in spring for export of 60,000 tons of surplus sugar from the country.
The white sugar production quota of Lithuania for 2004 is 103.01 thousand tons.
Respublika

Monday, 17th of May

Account deficit increased
Amid a rise in imports of goods, Lithuania's current account deficit widened to LTL 531.76 million in March, the Bank of Lithuania has reported.
Compared with February, current account deficit rose by LTL 237.1 million. However, the deficit declined by LTL 159.3 million on 12-month basis.
In the first quarter of 2004 the country's current account deficit made up LTL 928.7 million, comprising 7 percent of gross domestic product (GDP) forecast for the period. Current account deficit accounted for 3.8 percent of GDP in the January-to-March period of 2003.
Exports of goods grew by 5.2 percent, while imports soared 12.1 percent in March, compared with February. The annual rise of exports made up 14.7 percent, while imports grew by 10.3 percent in March of 2004.
Exports of services soared by 23 percent, month-on-month, while imports of services rocketed up by 36.1 percent. Compared with March 2003, exports of services declined 7.2 percent, whereas imports of services expanded by 14.1 percent.
Respublika

Liberal market – smaller ticket prices
Liberalisation of the air market is bringing novelties to the Baltic countries: an Italian cheap-flight company Volare has launched flights to Tallinn, while the air companies operating in Lithuania and Latvia have renewed flights or presented new ones and increased the number of flights.
In Lithuania, the Latvian air company Air Baltic is to launch flights as of June 1. The Latvian company will offer flights from Vilnius on 9 routes. Lufthansa raises the number of flights to Frankfurt up to 11 times. The Czech airlines company has added one flight from Vilnius to Prague. Lietuvos Avialinijos (Lithuanian Airlines or LAL) raises the number of lights to Brussels, Amsterdam and London to 5, 14 and 12 respectively. Starting the summer, the Lithuanian air carrier will be offering more flights to Moscow, too.
Even though Lithuania has not attracted cheap flight companies yet, the ticket prices have reduced significantly: the prices of LAL tickets begin at LTL 150, the prices of Air Baltic start at LTL 149. Other companies have presented more favourable pricing as well.
Verslo Zinios

More cargos transported by railways
The flow of cargo transported via Lithuanian railways increased by 12.1 percent year-on-year, still it remains the smallest in the Baltic countries. Relying on preliminary data, the state company Lietuvos Gelezinkeliai (Lithuanian Railways) carried 14.94 million tons of cargo over four months of this year.
The Latvian railway monopolist Latvijas Dzelzels carried 17.313 million tons over the given period, a 6.8 percent rise year-on-year.
The flow of cargo transported via the Estonian railways increased by 3.8 percent in January-April if compared to the relevant period last year and stood at 15.07 million tons.
Lietuvos Zinios

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