The Monetary Breakdown

When domestic economic experts debated a few days ago, on whether inflation in November would stand at 7,000% or 9,000%, their initial estimates seemed negligibly low. Those who estimated that the daily growth of prices would be 15% ended up with a monthly inflation of 7,000%; while an inflation of 9,000% was based on an daily inflation of 16%. It proved however, that according to data issued by the Federal Statistical Office, the daily growth of retail prices was 18.7%, a little over what the economists had mentioned, but that the difference in the monthly inflation was dramatically large, i.e., two, three times greater than the estimates.

It is a well known fact that hyperinflation with a monthly growth above 10,000% takes place at a greatly accelerated pace. Economic expert Miroljub Labus told VREME that it remained to be seen if the explosion would take place in December or in January, because the end of hyperinflation was unknown. The only known quantity is that it does have an end: either through the state's energetic antiinflationary policy, or in the monetary and overall disintegration of the national economy.

The Serbian, Montenegrin and Federal authorities are mum. The citizens of Montenegro can find some comfort in the fact that their November inflation stood at ``only'' 13,222% because Serbia's blockade of trade had prevented a monthly price growth above 20,000%. The prime ministers, the ministers and the media are all silent. It is interesting to note that the Belgrade daily ``Borba'' was the only big daily which put November's record inflation on its front page on Thursday. This dismal figure puts Yugoslavia just a step away from becoming the world champion in the history of inflation. On state television prime time news, the rate of inflation was read out unemotionally and immediately followed by a supplement on how everything is ready for the distribution of basic foodstuffs in a number of cities in Serbia. A little over a week ago, around 30,000 Belgraders queued in the freezing northerly wind to receive some flour, salt and coffee. This largesse was being distributed by ``Spona,'' a humanitarian organization sponsored by the Serbian Renewal Movement (SPO).

The other side of the coin was best seen at border crossings. Hordes of people with bags of all sizes and shapes; makeshift stalls on both sides of the border; long hours of apprehensive waiting at crossings and the arrogant mistreatment of passengers by anyone in authority.

These days it is impossible to get a businessman on the phone. Everyone is busy trying to salvage what they can, and solve the problem of how to speed up business and save one's property with an hourly inflation of 0.7%, not counting the acceleration of the past two weeks. Another great headache is how to exchange dinars and cheques quickly enough for goods or hard currency, so that the expenses of the previous transaction will at least be covered. This has become impossible, at least at the level of the overall economy. The shops are depressingly empty: the producers are not delivering new goods and the demand has dropped off. It was enough for the Association of Banks to be late a few days in increasing the maximum amount payable on November's cheques, for this doubtful solvency to disintegrate. What could be bought with a cheque written out for 150 million dinars on Friday (December 3, 1993)? Two packs of cigarettes, a few hundred grams of salami, or something resembling it...

The ruling policy has destroyed its own economy, primarily all that which is state-owned. In a short time the price of electricity has gone up for the third time, while monthly consumption is in the range of one Deutsche mark.

The devastation of the national economic infrastructure can be seen in the following example: two persons talked for a total of 36 hours on the Belgrade-Prague line. The calls were made from Belgrade, and the bill did not even add up to five dollars. Had the calls been made from Prague, the sum would have reached 2,700 dollars!

Most of the pensioners (except those of the armed forces), received pensions of one Deutsche mark these days, while those with top pensions of 45 DM can be considered affluent! They can afford to buy a half a kilo of coffee, or 1/4 kilo of coffee and two-three packets of cigarettes, so that when this is stretched out over the month, each sip of coffee tastes like heaven.

We will leave irony aside, since it is in bad taste to mock misery. The authorities' silence can only be interpreted as their satisfaction that things are developing the way they planned them. It seems fantastic that none of those in authority, especially in places where the real decisions are made, could not have known where the nonstop printing of money and a growing grey issue would land us. The next steps to be taken by Serbian President Slobodan Milosevic's ruling Socialist Party of Serbia (SPS) can only be guessed at, considering that the imminent monetary breakdown will not allow them to wring the citizens dry of their hard currency reserves via hyperinflation. The opposition and neutral expert circles forecast that the economic breakdown will be used for the introduction of some kind of a state of emergency, i.e., some form of a command economy. There are those who believe that thanks to the approaching disintegration, Milosevic might cede the republican government to the opposition. Even the impossible is possible with the ruling regime in Serbia.

Other scenarios also exist. One is offered by Mira Markovic (Milosevic's wife) in her column in the biweekly ``Duga'' which has often contained oracular information concerning the future moves of the Serbian authorities. She wrote recently of the ashes left by two conflagrations the Yugoslav and the Socialist ones. ``An army of unemployed, impoverished and deprived people is springing up on the ashes left by Socialism. The lumpenproletariat are increasing. The members of this army have no jobs or their jobs are insecure and poorly paid. They cannot afford medical care or education. They cannot afford Summer holidays, newspapers, chocolates or a new coat. On the other hand, there is a growing class of people who have become affluent overnight, thanks to war profiteering, street banking, the theft of state property, smuggling and blackmail, and through big and small acts of betrayal to the governments of some big and powerful states.''

In other words, it won't come as a surprise if a broad campaign is launched soon against ``the new class of smugglers and informers,'' as the main culprits of all of Serbia's problems. If this, or something like it happens, it remains to be seen how this will save the skins of those in power today.