HÜVITUSFOND

ANNOUNCEMENT

18.10.99

 

COMMENTARY TO THE OPINION OF FINANCE MINISTER SIIM KALLAS REGARDING 

THE 

ISSUE OF COMPENSATION FUND BONDS

 

Pursuant to law, the Compensation Fund will continue to issue bonds 

until the respective amendments are enacted. The Fund will also 

meet 

all of its liabilities to the current bondholders. The Compensation 

Fund also plans to conduct two more issues of bonds during this 

year.

 

According to the information from the Ministry of Finance, the 

accounts 

currently contain 3.1 billion privatization voucher kroons. 

According 

to the evaluations, approximately 1 billion privatization voucher 

kroons should be used for privatization of land, and 0.8 billion 

privatization voucher kroons for other purposes (except 

Compensation 

Fund bonds). Therefore, the Compensation Fund could still cancel 

1.3 

billion privatization voucher kroons. Considering the current 

market 

exchange rate of privatization vouchers, it equals approximately 

450 

million EEK. However, the Compensation Fund is obligated under law 

to 

issue bonds within the total scope of its capital stock, i.e. 1.516 

billion EEK (as of H1 1999). As the Compensation Fund has issued 

bonds 

for 489 million EEK, it still needs to issue bonds for 1.027 

billion 

EEK, which exceeds the necessary level by more than two times.

 

Hence, following these provisions of the Law on Compensation Fund 

is no 

longer economically reasonable. Proceeding from the above, the 

government needs to amend the Law on Compensation Fund to enable 

the 

Fund to issue bonds in accordance with market demand; also the 

volume 

of bonds to be issued should be determined on this basis.

 

 

Daniel Vaarik 

Counselor

Ministry of Finance

+372 61 13 508, +372 51 06 559 

 

 

Jaanus Kosemaa

Public Relations Manager

Hüvitusfond

+372 66 51 800, 824, +372 51 04 614