Still Trying

During Ante Markovic's term as the Socialist Yugoslavia's former Prime Minister, the price of sunflower seed was five times higher than the present one, the price of wheat is now half what it was then, a liter of petrol cost as much as a liter of milk. Today a liter of petrol costs as much as ten liters of milk; once a mediumsized tractor was the equivalent of 15 tons of maize, now 25 tons are needed... All in all, it is not surprising that only ten tractors were sold in Vojvodina last year ``the same number that was bought annually in my street alone,'' said the representative of the Farmer's Party at a meeting of the democratic opposition's Economic Council.

This was part of Marjan Risticevic's reaction to National Bank of Yugoslavia (NBJ) Governor Dragoslav Avramovic's statement that he had reached the 9% annual interest figure for credit given by commercial banks after talking to farmers, i.e., that it was based on their calculation that this was the price of capital that they could deal with successfully this year. Governor Avramovic left the meeting while data was being given on the farmers' former and present economic situation, so that he didn't make any comments on the matter, or the view that he had probably talked with Serbian President Slobodan Milosevic's supporters among farmers and those who gave their verbal support to a stable dinar, but were really working against it because they were not returning the credit they had been given by commercial banks. This is why it is said that the new dinar deserves to be dubbed the ``Sloba'' and not the ``Avram,'' for at least two reasons: the old dinar could not have failed anyway, i.e. hyperinflation would not have happened without Milosevic's approval, just as the excessive printing of money did not stop until he said so.

The matter in question does not concern fine points, but a crucial question regarding the functioning of the economic, legal and all other sectors of Yugoslavia's Constitutional makeup. And finally, who is responsible for the fact that the dinar has been stable for more than four months, Avramovic or Milosevic? An indirect answer to this question was given by deputy NBJ Governor Bozidar Gazivoda in an interview to the Belgrade daily ``Borba'' on Tuesday. Gazivoda said that last year's inflation or rather, hyperinflationary tax, was the only way of financing the budgetary deficit and that in the final phase the primary issue was directed towards filling up the state's coffers. Gazivoda does not mention the fact that considering the speed with which the dinar was devalued, there was not enough money to finance budget beneficiaries, and that the state had to stop hyperinflation then, for its own good.

Gazivoda does say however, that political structures are pressuring the NBJ Governor's Council to realize the economic program, ``because they themselves are now part of it,'' and adds that he believes that the authorities will persevere in this. Another statement by Gazivoda deserves attention. He said, with regard to the NBJ's announcement that it would stop financing the budgetary deficit from the primary issue in late July: ``Political structures have reacted favorably to this, in fact, surprisingly positively.''

The stability of the dinar is an enigma for the majority of the opposition, as could be seen at the meeting on Tuesday. Member of the Democratic Party of Serbia (DSS) Bojan Dimitrijevic said that he supported the policy of a healthy national currency, but doubted the feasibility of such a program, considering that it was being implemented by the same people who had brought about hyperinflation last year. This leads to the following conclusion: Avramovic will be able to protect the stability of the dinar, only as long as this is to the liking of the authorities. This does not mean that the Governor is just a puppet figure. Dimitrijevic admits that the Governor's stands overlap with those of the opposition, and that the only real difference exists over the privatization of the economy. And this is where Dimitrijevic smells a familiar rata policy which leaves the impression of achieving the promised equality of all forms of ownership.

It is a fact, that the disintegration of socially-owned property, has led to it being state-owned. The Serbian state owns 40% of the total national economy, including the infrastructure in other fields, which enables it to control the entire economy. But, there is another side to the coin. The part of the economy owned by the state has the greatest problems. The NBJ claims that Serbia's electricity-supply industry was greatly helped by credit from the primary issue last year, and that it now has losses of 600 million dinars and owes the state 100 million dinars. All in all, the electricity-supply industry is crying for a 20% price increase. Just like the farmers, experts working in the electricity supply company dream of the days under Ante Markovic's Government, when the price of electricity for the economy was seven times higher than it is today, and 15 times higher for the citizens. It is clear however, that with a rise in the price of electricity, the idyll of stable prices will come to an end, and that a chain reaction calling for a general rise in prices will start, i.e. the value of the dinar will drop.

Another shock to the stability of prices will come from the price of capital which is not 9% but at least 30% at the annual level. All this makes it clear why bankers are not protesting at the mass postponing of returning credit, all the more so as the credit beneficiaries are regularly paying interest and other expenses to commercial banks. Some bankers claim that they would advise their partners not to hurry with returning credit because they were given with very short terms. All this concerns profitable arrangements, but they are generally wary of the logic followed by ``Beobanka'' director who said that it was to be expected that credit would not be returned, considering that credit beneficiaries have a lot of employees and other problems (with regard to ``Beobanka''less than 10% of the credit given after the introduction of the new dinar, have been returned). Such fears are not based just on the apprehension that credit will continue to be thrown away on bum investments, but that the money will be manipulated for other purposes. Rumors coming from Kragujevac have it that the automobile plant ``Zastava'' will not get credit it has been promised, because the Serbian authorities wish to remove director Micic, but don't wish to do so openly. A lack of money would lead to a strike, and then the Government would fulfill the strikers wishes, i.e., dismiss Micic.

Be as it may, this particular example confirms claims by those who say that a slow down of the process of privatization in the economy, is giving the authorities greater leeway in various manipulations with the dinar, the economy and the people. But, it is also an indisputable fact that Governor Avramovic will change things, as of July, if he forces the state to run into debt for every dinar it wishes to spend above its income. He would do much more if he were to help the state go into debt on the real money market, because without such a market infrastructure, the price of money is arbitrary, including everything else. Both Avramovic and Milosevic want a healthy dinar. The difference lies in the fact that Avramovic keeps repeating that the dinar will be stable only while he remains NBJ Governor.