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February 21, 1994
. Vreme News Digest Agency No 126
The Draft Budget

The Withdrawal Of The Guns Or The Dinar

by Dimitrije Boarov

When it had seemed as if Dragoslav Avramovic's antiinflationary program would freeze military expenditures at 700800 million dollars, new tensions over Sarajevo cropped up. A possible air strike against Serbian artillery would automatically entail a ``stabilization budget,'' such as proposed during last week's session of the Federal Assembly.

In the draft federal budget for 1994, a sum of 743.5 million dollars has been earmarked for the army. Even though this is 75% of the entire budget, no cuts are foreseen with regard to last year's budget. It was believed that the matter concerned a moderate ``military budget.'' Namely, in a country with so many ``humanitarian'' commitments towards soldiers in neighboring countries, a military budget under 7.5% of the social product would be considered too radical an option in support of economic stability. The fact that aid to the Serb Krajinas will be cut down to 400 million compared to last year's 1,176 million, shows that drastic measures have been planned.

The Yugoslav army's financial plans show that the argument in favor of peacetime military expenditures is being supported. The general staff headed by General Momcilo Perisic have put forward this proposal. For example, 168 million dollars of the overall military budget are earmarked for salaries and pensions, which is more than the money planned for purchasing weapons and filling up of military reserves (150 million dollars). Salaries and pensions must be paid out in peacetime. The building of army flats is not considered a ``war expenditure,'' and over 50 million dollars have been set aside for this purpose.

It is difficult to say if 230 million dollars for the ``material transformation of the Yugoslav Army'' is too much, in spite of the country's straightened circumstances. In the proposed budget, it is said that the ``technical technological minimum in the autonomous production of ammunition and shells and explosive devices will be aimed at,'' (this refers to gunpowder, explosives, rocket fuel and ammunition with special pellets). Only those projects which have reached a ``critical phase'' in their realization, will be financed this year.

There is however a bit in the draft federal budget which throws suspicion on the whole military budget. The part which states that 75 million dollars are earmarked for weapons, contains the following explanation: ``Means foreseen for the purchase of weapons and military equipment will be financed with only 7.8% of the commitments carried over from 1993, and created on the basis of the regular 1993 plan and the urgent purchase of ammunition and shells and explosive devices in accordance with the decision reached by the Supreme Defence Council.''

When this is translated into plain English, it means that the Yugoslav army is the greatest debtor on the Yugoslav market, and that the budget does not foresee the settling of these debts. This attitude also suggest that the army will spend as much as it wants to this year, and that no budgetary limits will be binding. Most of the firms which did business with the army will not be paid for last year's expenses, and will continue fulfilling their contractual commitments this year too. Who will cover their expenses? Perhaps a new hyperinflation.

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