Prague, 2 October 1997 (RFE/RL) -- A formidable array of senior bankers and finance officials from East and West will gather in Riga soon for the third international conference on banking and finance in the Baltics.
The growing stature of the annual conference is reflected in the attendance: the heads or deputy heads of the central banks of Russia, Poland, Hungary, and the three Baltic states will be there, as well as all Baltic finance ministers, the regional chiefs of the World Bank, the International Monetary Fund and the European Bank for Reconstruction and Development (EBRD). Bankers and experts from the United States, Britain, Sweden, Germany, Switzerland, the Czech Republic and elsewhere will also attend.
Vilnis Ilzins, a spokesman for the conference organisers, told RFE/RL today that this year's conference will be the first to focus not only on the Baltics but also on the broader area of East and Central Europe. Ilzins said it's planned in future to make the conference a forum for exchange of banking experience throughout the whole transition region.
The head of the World Bank's Baltic Mission, Lars Jeurling, told RFE/RL today that the conference will offer a valuable perspective on progress in the region. As to Latvia, Estonia and Lithuania, he assesses their progress as very good. He says their growth rates are at the top end of the world scale, and that the problems they face are now the standard ones also found in the West, such as the need for continuing structural reforms. He says there's also a need to develop bigger capital markets in the Baltics, and better and properly supervised non-banking financial institutions, such as pension funds.
Jeurling says none of these need be viewed as major problems. But he says that on the macro-economic side, an area demanding priority attention is the increase in the Baltic states' current account deficits, resulting from their fast growth. Dealing with these deficits will be a key issue, and he cautions that all the upbeat indicators must not be allowed to produce over-confidence. He mentions the Czech Republic, which was considered a model of transition until earlier this year, when its reforms lost momentum and it ran into economic squalls.
American Financier Hamid Ladjevardi of Baltic Fund USA told RFE/RL today that he considers the Baltic states to be particularly attractive for foreign investment for a broad range of reasons. Not the least of these are historic and cultural factors such as the high level of education and the Nordic work ethic, as well as experience with advanced industry and democratic institutions.
Then there's the suitability of the Baltic region as a base for manufacturing investment. Ladjevardi notes that hourly pay rates in the Baltics are something like $1.50, compared with $30 in Germany and over $20 in the Scandinavian countries. Coupled with that, he says, is the favourable geographic position, which has always led to the Baltics being a transit route to the east and north. In addition he notes the national consensus in each of the Baltic states for pro-growth policies based on IMF prescriptions, like tight monetary policy, free flow of capital and stable currencies.
The Riga conference will feature a series of debates, and some of the topics are livlier than usual. One for instance, deals with the benefits and dangers of being part of the western financial system, in terms of the possibilities of fraud and manipulation. London banking safety expert Paul Dodd, who will take part in that debate, told RFE/RL that the issue is to balance the need to provide services cheaply with the risk of loss due to fraud.
He said there is a growing process of "pairing" between banks in the West and the transition area, and he hopes that good Western practise will "rub-off." He notes that central banks in the region are continuing to tighten up their regulations to control the situation. He says one of the big problems until now is that small banks have sprung from nowhere, as he put it, and they do not have the systems in place to support the bank's management on safty issues. As to the specific Baltic area, he says it is coming much under the Scandinavian influence of good banking safety systems.
The Riga gathering of course won't be limited to earnest consideration of how to make money and how to keep it safe. Participants will be invited to a performance at the Latvian National Opera of Verdi's La Traviata, which will be followed by a farewell party.