A Compromise Formula

In this way the resolving of the conflict between the ``concept of a public debt'' as urged by Avramovic, and the approach demanded by account holders and their lawyers, and which was accepted by the federal government, namely, that commercial banks must be the ones to pay out four billion dollars of foreign currency savings, is being postponed. The possibility that the matter will end in the latter way, was announced by Avramovic, during an interview to VREME, before meeting with representatives of the four associations of old foreign currency savings account holders, last Thursday. Avramovic told VREME that some of those who had accounts in the privately owned ``Dafiment bank'' could acquire the status of ``old foreign currency savings account holders.''

Avramovic insisted that the question of obligations towards foreign currency account holders be regulated as soon as possible, while he himself believes that these obligations must become a public debt, because the banks will not have enough money to cover these debts for a long time. With regard to his well known ``angry letter to Federal PM Radoje Kontic,'' in which he states his disagreement with the draft law which plans the liquidation of old foreign currency accounts over a five year period, and under which commercial banks would have to shoulder 70% of the burden, Avramovic said: ``I believe that I have won the debate for an approach whereby these obligations must be regulated to start with, and secondly that the banks don't have money, and won't have any for some time. We must find a solution for the current payment of 20 DEM/month, and this should not be stopped. A place for this must be found it in the budget. If savings account holders say no to a public debt solution, then we will have to say that the final solution will be reached after sanctions have been lifted.''

Asked if he was also thinking of persons with savings accounts at ``Dafiment bank,'' Avramovic said: ``There are two questions there. One question the state finds it difficult to answer. Namely, is the state responsible or is it not. Under domestic laws covering banking, all deposits are guaranteed by the state. Secondly, that woman (Dafina Milanovic, owner of Dafiment banked. note) worked with a license, and she had broad competencies. What kind of a National bank is it which didn't close her down, the moment she announced monthly interest rates of 15%. Otherwise, what is the purpose of a National Bank? If you issue a license, you are telling the people that the operation is a bona fide one. The state's responsibility must be defined formally, and if it is responsible, then who is it responsible to.

We have divided savings account holders into three groups. The first group who got their money back with a 5%6% interest rate. That is a normal interest rate, they can forget everything above that. That is one extreme. The other extreme are those who didn't get anything. The third group is in the middle. I think that the auditors working on ``Dafiment bank'' will soon be able to give us a true picture of the situation. If the state, i.e., the federal government admit to being responsible, then this group which didn't get anything will be treated according to principles valid for old foreign currency account holders; they should be. It would be possible to adopt the policy of converting the unexecuted demands into a public debt, ownership of office space, shares in firms, ownership of apartments, etc.

As far as the big investors are concerned, and there are those with deposits of over 500,000 dollars, an arbitration center could be set up, which would find methods of reaching an agreement with them.''

Avramovic did not deny the fact that his main concern is to stabilize and expand demand on the market. That is why he keeps reiterating that the buying power of wages is still too low, and that it must be greater. Avramovic insists that the state put corn reserves on the market ahead of the harvest, and possibly export reserves of wheat. Avramovic believes that the resulting drop in the price of corn and meat, would be compensated by raising the guaranteed price of the new harvest.

By strengthening the demand, Avramovic believes that production would be pushed forward over the coming months. Production could even be doubled, reaching the peacetime 80% high. Avramovic thinks, that with regard to the federal budget's aspirations, it is very important that he should collect all the available money on the market. ``When the state, through its apparatus, directly encourages production with money, then it, in fact, stimulates the creating of great reserves,'' said Avramovic, adding that some ten odd days ago his view won. Namely, that space must be made on the market dealing in papers of value, for the issuing of bonds which would enable broader ``investment efforts,'' since the current demand, cannot maintain the growth of the market.

``I was misunderstood, it was thought that I was asking the people for a loan for resolving current problems,'' said Avramovic. ``I was thinking of reconstructing our economic infrastructure, so that it would entice investors with an attractive interest rate of, let us say, 10%.'' Avramovic believes that attractive packages should be drawn up urgently, ones which would attract bonds and shares at home and abroad. Under sanctions, such program packages should be reviewed by a reputable and wellknown foreign auditing house, which have the final say on whether such packages would really bring in the promised income. The NBJ would issue guarantees, and protect domestic production with a 33% tax on imports. Avramovic underscores that profit is exceptionally high in many areas now. Asked which packages could be expected first, Avramovic mentioned telecommunications, the Belgrade heating system and electricity.

During our talk with Avramovic, we couldn't resist criticizing him for ``defending'' himself from rumors that he had sold several big Serbian industrial complexes while in America. ``No, I didn't defend myself. I have opted for a policy of not telling everything,'' said the popular Governor, adding that he had no biases as regards privatization, but neither did he believe that it was the road to fresh capital. And that seems to be the Governor's main obsession.