To disseminate free market ideas and gain passage for policy proposals, LFMI's team members participate in, and testify before, cabinet meetings, parliamentary committee sittings, policy-drafting groups, non-governmental forums, and public events. The LFMI has cultivated a friendly relationship with mass media and is regarded as a source of valuable information and analysis for reporters. LFMI's policy analysts publish and comment extensively in periodicals. Advantages of live communication are exploited through appearances on radio and television. These tools have proved constructive in enriching public debates, making a profound impact on the legislative outcome and strengthening the democratic process.

Private Enterprise

LFMI initiated fundamental revision of the company law in order to strengthen corporate governance and eliminate restrictions on enterprise borrowing and other business contracts. To achieve these goals, LFMI analysed the functioning law and met with representatives of legal consulting firms, July 2. As a result, LFMI prepared a package of amendments designed to lift restrictions on corporate borrowing and investments in other companies, to simplify the procedures for merger and acquisition, to remove the provisions allowing companies to pay old debts to the budget with assets and shares, and to liberalise management of joint-stock companies.

LFMI submitted the project of amendments to a working group under the auspices of the president of Lithuania. The project was approved by the Lithuanian Industrialists Confederation, as reported by Verslo žinios, August 26. The president sent the final version of the amendments for governmental consideration before its submission to parliament.

LFMI took steps to prevent the introduction of excessive regulations and restrictions on leasing as well as to advocate replacement of tax regulations discriminating against leasing activity. LFMI analysed a new draft law on leasing, which was proposed by the Economic Ministry. Based on the analysis and consultations with leasing companies, LFMI formulated recommendations concerning the draft law. According to LFMI, with minor changes to the Civil Code, an appropriate legal framework for the leasing system can be completed. A new law is likely to complicate the legal structure for leasing and to introduce too many restrictions and government interventions. Šimasius was cited on the issue in Lietuvos rytas, July 16.

A series of policy advocacy activities and media appearances from LFMI in June and July provoked intense public debates. As a result, policy deliberations on the new draft law on leasing were halted.

Ugnius Trumpa contributed an article about the consequences of the newly adopted rules of labelling of goods to the July 11 Respublika.

LFMI made in-depth analysis of the regulatory framework governing labour relationships. Ugnius Trumpa and Remigijus Šimasius presented a policy paper with conclusions and proposals to the Economic Ministry, September 4.

Šimasius commented on competition in the September 28 Lietuvos rytas.

Capital Markets

On July 2, parliament passed the controversial amendments to the law on personal and corporate income tax, imposing taxes on dividends and capital gains unless they are reinvested. The imposition of capital gains tax prompted a barriage of criticism from stock brokers and market experts. LFMI came out in opposition to these amendments, arguing that the tax would hamper the development of the capital market and that any revenues generated by the tax would be offset by the administrative costs. LFMI consolidated efforts with the National Stock Brokers Association and market experts in order to revoke the tax.

Elena Leontjeva, Rūta Vainienė and Remigijus Šimašius participated in a meeting of the National Stock Brokers Association with the Finance Ministry, July 7.

Leontjeva and Vainienė attended a meeting of the president of Lithuania with capital market participants and government institutions.

Vainienė commented on the capital gains tax in Lietuvos rytas of July 2, Verslo žinios of July 27, Kauno diena of July 1, and Baltic Times of October 8-14.

Leontjeva was cited in Respublika, July 11 and 25, and Lietuvos rytas, September 28.

As a result of the meeting with the veto-empowered President Valdas Adamkus, a compromise was reached which was overwhelmingly approved by parliament on September 29. A 15-percent capital gains tax was adopted instead of the original 29 percent, and a minimum tax-exempt level was set. The latter provision will allow small-scale participants in the stock exchange to invest tax-free.

Financial Infrastructure

LFMI continued to participate in the policy-drafting process on private pension funds. When the pension fund bill was submitted to parliament, LFMI intensified its policy advocacy efforts to help ensure that the pension fund law provide for a transparent and sound operation of pension funds.

In mid-September, LFMI submitted a policy paper with proposed amendments to the pension fund bill to the Securities Commission and the parliamentary Finance and Budget Committee.

Audronė Morkūnienė attended the Sep. 14 sitting of the parliamentary Finance and Budget Committee and the Sep. 28 sitting of the Social Security and Labour Committee where the bill was presented.

Morkūnienė spoke at a press conference on the pension fund bill in the parliament, September 22.

Morkūnienė appeared about future pension funds on the Lithuanian Radio, September 16. She was interviewed for the September issue of the Esu journal.

Supporting legislation. For the past few years, LFMI has stressed the need to set the upper ceiling for social security contributions. Recently, the Social Security and Labour Ministry came out with a project of amendments to the State Social Insurance Law, proposing to set a ceiling five times the country's average earnings for all insured. For those who participate in supplementary pension insurance the ceiling was set at 3.5 times average earnings. LFMI evaluated the project and submitted a policy paper to the Ministries of Finance as well as Social Security and Labour. LFMI proposed that a general ceiling be established for all insured.

Audronė Morkūnienė commented on the proposed changes for the news service of M-1 radio, September 30.

The government approved the upper ceiling for social security contributions at 3.5 times the country's average earnings as of January 1999. The ceiling will be reduced by 0.5 points as of the year 2000. Consistent with the LFMI's proposal, the ceiling was not linked to payments into private pension insurance.

LFMI participated in revising the amendments to the personal income tax law and the state social security law which provide for exemption of pension fund contributions from income tax and social security payments. The government has proposed that contributions to private pension insurance in the amount of up to 25 percent of personal earnings be exempted from personal income tax and social security payments. The proposed amendments will be debated in parliament together with the pension fund bill.

Elena Leontjeva commented on the privatisation of the Lithuanian Telecom in a Scandinavian newspaper Bosen, June 22.

Other areas

Elena Leontjeva commented on Russia's crisis and its implications for Lithuania for the Lithuanian Television, September 9, the Russian Izvestia daily, September 10, The Chicago Tribune, September 24, Associated Press TV and the Swiss Neue Zurcher Zeitung paper, September 29.

Leontjeva was cited about the role of central banks in the Veidas journal, September 10 (quotation from The Free market, No.5/1997).

Vainienė and Šimasius testified before the Constitutional Court of Lithuania on the application of excise duties, September 24.

Leontjeva commented on deflation in the July 9 Lietuvos rytas.

Guoda Steponavičienė and Ramūnas Vilpišauskas attended the 7-th Conference on the Theory of Probabilities and Mathematical Statistics; 22-nd European Congress of Statistics and a round-table discussion on statistics and economics in the countries of transition, August 12-18. Steponavičienė wrote an article on statistics to the Naujasis Židinys journal, No. 5-6/98

Steponavičienė commented on the construction of the European-standard railway in Lietuvos rytas, August 26. She was cited on privatisation of bus companies in Lietuvos rytas, September 21.

Leontjeva delivered a speech about ways to improve the business environment in Lithuania to a meeting of American Chamber of Commerce, September 3.

Morkūnienė attended the Third Meeting of Actuaries of Central and Eastern Europe in Riga, September 5-7.

LFMI was featured in a German Maerkte der Welt journal of July 2 and the Summer 1998 issue of the Atlas Foundation's newsletter, Highlights.