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March 6, 1995
. Vreme News Digest Agency No 179

Macedonia: Ljube Trpevski, Minister

Following long and hard negotiations, Macedonia got the International Development Agency (IDA) to approve an 85 million dollar loan under favorable conditions (a 30 year repayment period and no interest). Just two days later, the Macedonian press reported that Sweden is sending 110 million dollars in aid to the former Yugoslav republic. Ljube Trpevski is Macedonia's chief negotiator with international financial institutions.

VREME: Minister Ljube Trpevski, what did you have to do to get the loan?

TRPEVSKI: There were things we had to plan despite the demands of the World Bank and International Monetary Fund (IMF). If we want inflation kept low, a stable exchange rate, efficient social policy and production that will contribute to the growth of the social product we have to stick to the policies we agreed to. The support of international financial institutions makes all that easier to bear.

VREME: World Bank experts drew up a program for the sanation of 25 companies which recorded the largest losses. The program includes firing surplus employees. How will that affect the overall political and social situation in Macedonia?

TRPEVSKI: We will have a larger number of unemployed but bear in mind that a large number of employees in those companies didn't work at all last year and weren't paid. The difference is that these workers will now have to report to unemployment offices. Funds have been earmarked for them in the budget for severance pay and upkeep for two years. We have to take that step because if we didn't we would have to start printing more money in Prilep. Loss making companies will get programs and will have to stick to them. They will go into receivership if there is no change.

VREME: A program and plans have been drawn up for banks. How will that be implemented and how much will it cost?

TRPEVSKI: The program, drawn up by foreign experts, will first reduce the size of the banks. That means the Stopanska bank which accounted for 70% of Macedonia'a banking system and practically had a monopoly and prevented the central bank from implementing a rational monetary policy. We also plan to reduce its size to 1.8 times the value of the Komercijalna bank. That will come in two stages: first some branches will be separated and second, some budget deposits will be given to other banks. That will reduce the Stopanska bank to 30-35% of the banking system.


Croatia: End of the Economic Miracle


The unfounded rumors of an economic miracle are growing rare in Croatia because figures and realism deny that view of the economy. President Tudjman is still an incurable pessimist and he keeps promising milk and honey to the population. He said recently that in an "independent and democratic state there is every condition for economic development. Croatia's economic goal is to reach the level of developed Europe by increasing the gross domestic product from today's 4-5,000 dollars per capita to the European 20,000.

The figures don't support his statement. Figures aren't interested in ideology or how else could you explain the fact that industrial production in 1994 was 2.7% lower than in 1993 or that the last year that production growth was recorded was 1987. Industrial production in 1994 was 51% lower than in 1987 and 44% lower than pre-war 1990.

The main cause of that state should be sought in the war but the current authorities are no less to blame since they failed to preserve profitable industrial branches such as shipbuilding or the textile industry.

Or how is it that official unemployment figures are always around the 250,000 mark while official estimates put the number of people who left the country at 92,000 and unofficial figures at double that. How is it that the state of prosperity which predicts it will reach the level of the most developed countries soon has an average salary of around 380 DEM while the minimum wage in Europe ranges from 500 (Portugal) to 2,000 (the Netherlands) and the minimum hourly rate between five (Greece) and 12 (Luxembourg)/

Late last year, the Croatian government adopted a 1.6 billion DEM budget (which has already been proved to be unrealistic), and promised a 7% rise in the social product. It provided no explanation for that optimistic prediction which every prominent economist disputed.

Obviously, a lot of things are not going the way someone wants them to. When the first wave of inflation started in late 1993, the government promised a stabilization program which was never drawn up. Prime Minister Valentic keeps repeating that it was hard to curb inflation although everyone knows it was just a question of monetary technique.

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