Analyst expects year-end growth

Ardo Hansson, a World Bank macroeconomic analyst, says that the solution to Estonia's budget deficit lies in its capability to cut public spending

Hansson criticised the opinions of some Estonians politicians to use strategic state deposits in German banks.

The analyst pointed out that the rise in wages of civil servants has been much higher than expected. This has pushed up real wages while small businesses and agriculture find it difficult to survive.

According to Hansson, Estonia's economy is already showing signs of recovery which may lead to growth in the fourth quarter.

If his expectations become true, economy may grow in annual terms.

SuperTel challenges monopoly

A new international telephone call service is now available in Estonia through SuperTEL, a Finnish provider of Internet services.

The new service is bound to create controversy, since Estonian Telephone has disputed SuperTEL's right to provide such services, referring to its concession agreement with the Government of Estonia.

SuperTel's clients need to call the firm's dial-in service in Finland which then places the call through the Finnish telephone network.

Ants Aasmets, representative of SuperTEL in Estonia, says that by law SuperTEL is not violating the exclusive rights of Estonian Telephone.

According to the concession agreement made between the Government of Estonian and Estonian Telephone Co., the latter has a monopoly to provide international telephone calls until January 2001.

IMF urges to look for public cuts

Representative of IMF in Estonia, Dimitri Demekas, says that the current problems of Estonian economy did not take IMF by surprise.

«We expected this», said Demekas, commenting the budget deficit and slowdown.

Demekas added that in spite of growing problems in economy, IMF was still expecting growth at the end of 1999.

In May the IMF delegation recommended Estonian authorities to cut the budget by 2.3 billion EEK. A budget cut of one billion has already been made by the new government.

Demekas said that the possibility of funding budget deficit from strategic reserves would not be a practical solution to the problem.

SEB: investment climate stays good

Ando Muldre, SEB Central Europe and Baltic area manager, says that the Baltic states can be confident on continuing investment flows.

While Swedish and Finnish companies continue to dominate in Estonia, other Nordic investors have been looking for deals in other Baltic states.

In Lithuania, Carlsberg and Codan, two Danish firms, have recently acquired a brewery and an insurance company, respectively. Muldre believes that acquisitions of Baltic companies by foreigners will increase their efficiency.

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