Lithuania Business News: Archive 2003-
Saturday, 17th of October
IMF calls Lithuania to reduce wages in public sector
The International Monetary Fund (IMF) has proposed to Lithuania to reduce wages in the public sector, which is responding to the economic downturn slower than the private sector. "Measures shall be deeper and wider and shall assure long-term savings, in order to support the decline of fiscal deficit in 2010 and in later years, as pursued by the Government. The options could include further reduction of the wages fund, which would generate additional savings and eliminate existing differences between the wages in the public sector and the wages in the private sector, which changed faster considering the economic situation," the IMF said in the conclusions on its latest visit to the country. The IMF mission visited Lithuania at the end of September. As projected by the IMF, Lithuania's gross domestic product (GDP) will contract by 18.5 percent this year and further 4 percent next year.
Proceeds have already received
The Lithuanian government on Friday received the proceeds from its USD 1.5 billion bond issue, which was completed on Thursday. The Finance Ministry said that the money had flown into the government's treasury accounts. This has been the biggest-ever sale of Lithuanian government bonds in foreign markets. The issue, maturing on January 15, 2015, carries an annual interest rate of 6.75 percent. The government will use the money to finance budget expenditures. The Minister of Finance Ingrida Simonyte stated that successful bond issue showed that investors trusted and supported fiscal policy and consolidation means carried out by the Government.
Not all were allowed to export
Lithuania's State Food and Veterinary Service (VMVT) has announced that Russia will allow 11 Lithuania's dairy companies to resume exports. The decision was taken in Moscow where VMVT director Kazimieras Lukauskas met with the heads of Russia's Federal Service for Veterinary and Phytosanitary Surveillance. Agriculture Minister Kazys Starkevicius told that Russia intended to allow major Lithuania's dairy producers, i.e. Rokiskio Suris, Pieno Zvaigzdes and Zemaitijos Pienas, to resume their exports to Russia's market. Russia suspended imports of dairy products from Rokiskio Suris, Pieno Zvaigzdes, Zemaitijos Pienas or their subsidiaries in August, and in September, it extended the measure to include all dairies owned by Rokiskio Suris, as well as the milk processing company MGL Baltija and the ice-cream producer Ingman Ledai. Russia said that it has found antibiotic residues in the products of those companies, although some high-ranking Lithuania's officials assume that such measures are rather protectionist as the country's authorities seek to protect local producers.
Friday, 16th of October
Stable October is forecasted
Lithuanian Statistics Department projects that the EU-harmonized monthly inflation will reach 0.1 percent in Lithuania in October. Annual harmonized inflation is expected to reach 1.5 percent, whereas in September it constituted 2.3 percent. When increased VAT came into force in September, inflation increased after reduction of prices recorded several months in turn.
New stocks of Snoras bank LTL 1
The Lithuanian bank Snoras, which is owned by two private individuals, will ask the shareholders to raise the authorized capital with additional contributions worth LTL 88.077 million, to LTL 500 million. The subscription price is equal to the share face value, i.e. LTL 1, the bank's statement says. Snoras' shareholders will vote on the proposal at the meeting due on November 5. Snoras bank distributed LTL 72.5 million of loan securities on August 31.
Stumbras challenges world markets
Lithuania's largest strong alcoholic beverage producer, Stumbras, has invested around LTL 2.5 million litas in renewing its Lithuanian Vodka line as part of export expansion efforts. Stumbras Marketing Director Algirdas Ciburys told that the company is eyeing new export markets in Asia, Western Europe, the United States and Latin America. Stumbras now exports around 15 percent of its products to 30 countries. Based on data from the market research company AC Nielsen, the Lithuanian Vodka line held a 30 percent share of the Lithuanian vodka market in September 2008 through July 2009.
Thursday, 15th of October
Will raise barriers?
Lithuanian Agriculture Minister Kazys Starkevicius informed that Russia is expected to allow Lithuania's biggest dairy producers, Pieno Zvaigzdes (Milk Stars), Rokiskio Suris (Rokiskis Cheese) and Zemaitijos Pienas (Zemaitija Milk), to resume their exports. "It was said on Saturday that imports from all main cheese exporters would be resumed," said Starkevicius, who held talks with Russian officials in Moscow last Saturday. He added that they expected Russia to give its final answer on this matter on Friday.
The European Bank for Reconstruction and Development (EBRD) has extended to Lithuania's Siauliu Bankas a convertible loan in the amount up to EUR 30 million. The loan agreement was signed on Wednesday, October 14.
Left decision to Seimas
Lithuania's government has approved in principle a proposal to raise the rates of contributions to the mandatory social insurance fund (Sodra) despite the opposition of the ministers representing the Liberal Union in the Cabinet. Final decision would be taken by the parliament, Prime Minister Andrius Kubilius said. As proposed by the government, the rates of contributions paid to Sodra by the employers and employees would increase by 1 percentage point each. According to Donatas Jankauskas, the Minister of Socail Security and Labour, SODRA should receive almost LTL 10.4 billion income next year, whereas expenses are expected to reach LTL 12.7 billion. Jankauskas maintains that this law is temporary and explains that it means that these means will be applies for two years, in 2010-2011.
Wednesday, 14th of October
Prices are decreasing due to declined usage
The retail trade chain Maxima has announced that prices of 1,000 food products have been reduced by 5-25 percent. It is stated that bread, meat, dairy products, noodles and oil cost cheaper. Gintaras Jasinskas, the general director of Maxima LT, has maintained that usage is further declining and price is becoming the main criterion of buying for people. Goods which have become cheaper by more than 10 percent are marked by a sign Atpigo (Has Become Cheaper) in Maxima chain stores. According to Jasinskas, a decision to reduce prices has been made now because heating season is coming and people will save more and will limit usage. Usage decreased by up to 17 percent in September in comparison with last September.
Lithuanians do not care about Latvians and Russians’ example
Lithuanian officials have already borrowed more than LTL 5 billion. Moreover, the journalist states that the Lithuanian Government defends interests of banks and does not care about people’s interests. Lithuanians expect that the state will take care of them as in the rest of the civilized world. However, as the journalist indicates, these hopes are meaningless. He provides examples of Latvian and Russian governments which attempt to limit activity of banks and help people who have financial difficulties in relation to loans.
Calculated works and missed them
Lithuanian Confederation of Industrialists has calculated works which the Government has committed but has forgotten to do in nine months. According to calculations, the Ministry of Social Security and Labour has implemented 52 projects that are relevant to business but has forgotten 20 of them. The Ministry of Environment has implemented 34 means important to industry and has not implemented 9 of them. A number of not implemented projects has exceeded the number of implemented ones in the Ministry of Energy. The director of Economy and Finance Department of the confederation Sigitas Besagirskas states that industrialists have provided about 300 offers to the Government this year but only 135 of them were discussed.
Tuesday, 13th of October
Corporate profit tax will decline twice for small companies
The corporate profit tax rate for most Lithuanian companies is likely to be cut to 15 percent from the current 20 percent, and for small companies, to 7.5 percent from 13 percent, at the start of next year. Danas Arlauskas, the director general of the Lithuanian Business Employers' Confederation, stated that regulation, according to which corporate profit tax rate for large companies had to be reduced from 20 percent to 15 percent and for small companies from 13 percent to 10 percent, was not adequate and it discriminated small companies. The corporate profit tax rate was raised to 20 percent from 15 percent early this year. A small company is a company that employs up to 10 persons and has annual revenue of up to LTL 500,000.
Verslo Zinios, Lietuvos Zinios
Paid less, thus bought up less
The Agriculture Ministry reported that the average natural milk purchase price in Lithuania slumped by 30.4 percent in September from a year ago, to LTL 569.6 per ton. The price, however, edged up by 5.9 percent compared with August. The total volume of natural milk purchased from farmers in September dropped by 7.2 percent year-on-year.
Fight regarding budget in Government
Members of the Government did not agree how much teachers, culture employees and officers’ salaries had to be reduced. Ministers are planning to speak with the Minister of Finance Ingrida Simonyte separately and request more money for their areas. Simonyte is apt to agree to reduce teachers’ salaries by 5 percent and lecturers’ salaries by a tenth. If a salary fund of courts is reduced by a tenth, court employees’ salaries will decrease even by 45 percent. Otherwise, about 40 percent of court employees have to be fired. The Prime Minister Andrius Kubilius has stated that it is necessary to reduce budget of next year and keep it below GDP limit of 10 percent. The Minister of the Interior Raimundas Palaitis thinks that income of budget of next year is planned too pessimistically because budget income has been higher than planned in the last two months. Rimantas Rudzkis, the chief analyst of DbB Nord bank, has maintained that the budget for next year is very realistic and increased income in the last two months are temporary.
Lietuvos Rytas, Respublika
Monday, 12th of October
Prices changed in October not only due to taxes
Traders maintain that they have finished change of prices in relation to increased VAT. Still, part of food products prices rose more than taxes last month. The traders state that providers are guilty of that. Prices of dairy products are further declining, except for butter. The retail trade chain Rimi increased prices in September but in October it has been decided to reduce them due to competitors. The retail trade chain Maxima claims that it is planning to consider prices of most products and reduce them for a long period.
Bank has announced about its intentions to come
Finland's Pohjola Bank plans to start operations in Lithuania in two to three years' time; it would provide loans to corporate clients. The bank also has plans to open its offices in Riga and Tallinn. Pohjola Bank CEO Mikael Silvennoinen said that the bank was looking to enter the Baltic markets even through its competitors were cutting back on their loan portfolios in the crisis-hit region. "This is a good time for a newcomer like us," he said. Silvennoinen said that the bank would focus on Finnish companies with operations in the Baltic countries but it would also lend to other medium and large-sized companies. It also plans acquisitions in the insurance industry with the aim of becoming the third-biggest insurer in the Baltic States, and is also thinking about expanding into Russia. The Finnish bank has posted a profit of EUR 65 million for the second quarter of this year. The financial group Pohjola now holds a majority stake in the Lithuanian non-life insurance company Seesam Lietuva.
Will buy electricity from Belarus
Lithuania's power transmission system operator Lietuvos Energija (Lithuanian Energy) on Friday signed a contract to buy electricity from Belarus' Belenergo starting next year. "We secured potential electricity supplies from the Scandinavian market, Estonia and Latvia, and now we have successfully completed negotiations with the Belarusian energy company. Being able to buy electricity from as many countries as possible we will be ready to ensure reliable supplies to Lithuania after the shutdown of the [Ignalina] atomic power station," stated Edvardas Vazgela, the director of the Market Administration Department at Lietuvos Energija. The country plans to buy some 35 percent of its total electricity needs in 2010, estimated at around 9.1 billion kWh, under market conditions from Estonia, Latvia, Scandinavia, Ukraine, Russia and Belarus, as well as from local producers.
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