HÜVITUSFOND

ANNOUNCEMENT

10.08.99

 

COMMENTARY TO THE GOVERNMENT’S PLAN TO END THE CHANNELING OF INCOME 

FROM PRIVATIZATION INTO COMPENSATION FUND (HÜVITUSFOND)

 

In the recently published State Audit report on Compensation Fund’s 

activities in 1998, the State Audit Office made a proposal to the 

Government to amend the laws on Compensation Fund, land reform and 

privatization in order to end channeling of 45% public property 

privatization revenues, 45% of public land privatization revenues 

and 

25% municipal property privatization revenues to the Compensation 

Fund 

as of 01.01.2000 at the latest. The Fund’s capital stock allows by 

now 

to issue bonds under the respective law and sell them for 

Privatization 

Vouchers, and secures the Fund’s liability to issue bonds for 

amount 

received from cancellation of Privatization Vouchers and from other 

reserves (excerpt from the State Audit report).

 

Pursuant to the law on Compensation Fund, the Fund is obligated to 

issue bonds for total amount of privatization revenues. As of H1 

1999, 

the Fund had received 1.516 billion EEK of privatization revenues. 

As 

of the beginning of its operations, the Compensation Fund has 

issued 

bonds for total of 489 million EEK. Hence, as of today, the Fund is 

obligated under the law to still issue 1.027 billion EEK worth of 

bonds.

 

As the Compensation Fund sells bonds for Privatization Voucher 

kroons, 

the issuance of bonds is restricted by number of Privatization 

Vouchers 

in circulation, i.e. the Fund cannot issue more bonds than there 

are 

Privatization Vouchers. According to the latest data from the 

Finance 

Ministry, the accounts still contain approximately 3.1 billion 

Privatization Voucher kroons, i.e. about 992 million Estonian 

kroons 

(market exchange rate 1 EEK = 0.32 EVP).

 

The Compensation Fund’s capital stock therefore is sufficient to 

cover 

all existing Privatization Vouchers and meet all liabilities to the 

current bondholders. Proceeding from the above, it would be 

economically rational to end channeling of privatization revenues 

to 

the Compensation Fund.

 

 

Jaanus Kosemaa

Public Relations Manager

Hüvitusfond

+3726651800, 824, +3725104614