Wednesday, 8 November1995
Volume 2, Issue 217


BUSINESS NEWS
-------------

**CLOSER TO CONVERTIBLE**
The Hungarian parliament passed a foreign exchange bill
yesterday.  The legislation brings the forint one step closer to
convertibility and is a condition of Hungarian membership in the
Organization for Economic Cooperation and Development., or OECD.
 It's set to take effect January first.    The measure will make
the forint fully convertible for current account transactions.
It will also let Hungarian companies take out loans abroad with
maturities longer than a year as long as they report the loans
to the central bank.  Foreigners will also be able to buy most
Hungarian securities with maturities longer than a year without
permission from the government.  Hungarians also won't need
approval to invest abroad if they're buying a stake of more than
10 percent in a company.

**INVESTORS ARE COMING**
While the peace talks drag on. throughout what could be the final
stages of the fighting in the former Yugoslavia a much less
public development has been taking place in Serbia.   Foreign
investors are back.  CET's David Fink explains.  Some companies
lost millions of dollars when sanctions were imposed on Belgrade
in 1992.  Now they have  returned to Belgrade eager to recoup
their losses.  German and Russian firms are especially
interested. and Hungarians, Slovenes...Greeks and--yes, Croats
are also there.  Some major deals have already been signed,
including a contract for the purchase of a million tons of
Serbian grain as soon as the sanctions are lifted.  What's
behind this renewed interest in Serbia?  Mainly pent up demand
from Serbian consumers who desperately want to buy things they
haven't been able to get because of the sanctions.  Bela Papp is
the editor of Business Central Europe Magazine.

"Serbia by far is the bigger country of former Yugoslavia.  It
has a population of ten  million which is sort of the same size
as Hungary and the Czech Republic...And definitley bigger than
Croatia or Slovenia which are the other two big markets of--and
macedonia definitely."

Papp says another plus is.it looks like Serbian President
Slobodan Milosevic will be forced to stick with market reforms
if and when sanctions are lifted.  Papp thinks that'll mean
privatizing state-owned companies.  But Serbia has its
disadvantages too.  Most of the former Yugoslavia's best firms
were in Slovenia or Croatia.  Serbia was stuck with the
inefficient mining and heavy manufacturing sectors.  Also,
there's no guarantee that Milosevic will continue listening to
Central Bank Governor Dragoslav Avramovic.  Avramovic has been
an essential part of Serbia's limited economic growth.  He
engineered a stabilization program last year that brought
inflation down from a trillion percent to zero percent.  But
Papp thinks we might now have to worry about Milosevic much
longer.

"He's been the architect of a disasterous policy over the past
four years both on the economic side and the foreign policy
side..A policy that has isolated the country and that will take
a long time to--the memory of which will take a long time to
overcome and digest.  In view of that I think he will pay the
price and you will see him vanish and disappear."

With Milosevic gone, the way would be clear for reformers like
the central bank head.  Specifically, Avramovic wants rapid
privatization, devaluation., reform of the financial system, the
freeing of interest rates and liberalization of Serbia's
regulatory environment to break powerful lobbies.  If he gets
his way, Serbia will look very good to foreign investors.



ABOUT CET ON-LINE
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OMRI DAILY DIGEST
No. 219, 9 November 1995

POLAND BECOMES NON-PERMANENT MEMBER OF SECURITY COUNCIL. Poland on 8
November became a non-permanent member of the UN Security Council for
the next two years, Polish media reported. Permanent Polish
Representative to the United Nations, Zbigniew Wlosowicz, pointed out
that while Poland has been a non-permanent member four times in the
past, it can now present its "sovereign foreign policy" within the
Regional Eastern European Group. Hungary and the Czech Republic have
both served as non-permanent members since 1989, Rzeczpospolita reported
on 9 November. -- Dagmar Mroziewicz

SHUTDOWN AT HUNGARIAN NUCLEAR POWER STATION. One of the four reactors at
Hungary's only nuclear power station was shut down for a few hours
overnight , Hungarian media reported on 8 November. According to the
state radio the incident did not pose any threat and was caused by a
faulty measuring instrument. Director of the Paks reactor Janos Szabo
denied initial media speculation that the reactor had broken down,
saying it was ordered closed because of the defective measuring device.
The station has four high-pressure water reactors that went into service
in 1983 and provide more than one-third of the country's energy. --
Zsofia Szilagyi

***********************************************************************
Would you like more details and expanded analysis on many of the topics
covered in the Daily Digest? OMRI also publishes the biweekly journal
Transition. The 3 November issue takes a special look at the Balkan
conflict, including these titles: -- "An End Game in Croatia and
Bosnia?" -- Tuzla: "Where Will All These People Go?" -- Mostar: "A Test
Case for the Muslim-Croat Federation" -- Other articles include an
interview with Albanian writer Ismail Kadare. The 17 November issue
examines the changing nuclear threat in the former USSR and Eastern
Europe with such articles as: -- "Nuclear Arms - A Soviet Legacy" --
"Kazakhstan Staggers Under Its Nuclear Burden" and -- 'The Chornobyl
Fallout Persists" -- For subscription info, send e-mail inquiries to

By mail to OMRI Publications, Motokov Building, Na Strzi 63, 140 62
Prague 4, Czech Republic. Tel.: (422) 6114 3303; Fax: (422) 426 396.
***********************************************************************

[As of 12:00 CET]

Compiled by Jan Cleave


(Elnezest az esetleges kisbetukert, de az eredeti szoveg csupa
nagybetuvel volt irva, amit at kellett cserelnem.)

Buchwald Amy

*****************************************************************

date=11/8/95
type=correspondent report
number=2-188189
title= East Euro/Politics (l only) 
byline= Barry Wood 
dateline= Prague 
content=
voiced at: 

Intro:  The new transition report of the European Bank for  
Reconstruction and Development (EBRD) finds that wage rates in 
the transforming economies are lagging behind overall economic 
growth.  V-o-A's Barry Wood reports the figures may explain why 
voters are expressing dissatisfaction in recent elections. 
 
Text:  The highest incomes in Eastern Europe are in Slovenia 
where average monthly wages are about 600 dollars.  In most  
countries -- including fast reforming Poland, Hungary and the 
Czech Republic -- wages are much lower, about 300 dollars per 
month.  Farther east, in the Baltics, the richest region of the 
former Soviet Union, wages are lower still, about 200 dollars per
month.  In Russia wages average about 100 dollars per month.  
 
These new figures from the E-B-R-D are a counter point to the  
report's otherwise glowing assessment of the region's economic 
performance.  In Poland, where a vibrant economy is experiencing 
its fourth consecutive year of growth, wages have been increasing
faster than the economy as a whole.  After inflation, average 
wages are up eight percent this year and eight percent last year.
Poland along with Slovenia are the only countries to have 
regained the output levels of 1990.  All of the other 
transformation economies still produce less than they did in 
1990. 
 
The European Bank explains this lag with the example of the 
post-World War Two adjustment in the United States.  Following 
the end of the war in 1945, U-S output dropped during a deep 
recession by 20 percent during the next two years.  The U-S gross
domestic product did  not  reach the pre-transition level of 1945
until 1952. 
 
Experts say voters obviously are impatient for improvements in 
their living standards.  Several analysts say economic 
dissatisfaction led to the communist comeback in Poland two years
ago, in Hungary last year, and the recent defeat of a 
center-right government in Latvia.  Communists are expected to do
well in Russia's elections next month. 
 
In some economies  not  only are real wages lagging, but once 
generous social welfare spending is shrinking.  Hungary has 
recently implemented cutbacks in allowances for students and 
familes.  In the slowest reforming countries old age pensions 
have been savaged by inflation and benefits are a fraction of 
what they were five years ago. 
 
Throughout Eastern Europe there is now a growing disparity in 
incomes.  In the fast reforming countries opportunities for well 
educated urban young people who speak foreign languages seem 
almost limitless.  In rural areas and among the less well 
educated life is often harder than it was under communism. 
(Signed) 

neb/bdw/mh/cf

08-Nov-95 10:33 am est (1533 utc)
nnnn

source: Voice of America