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May 29, 1995
. Vreme News Digest Agency No 191
The Fate of "Avram"

A Change of Governors

by Zoran Jelicic

Nobody has said that there will be any change of NBJ Governor, but then nobody has denied this information either, in well informed economic and political circles. This is the reason that those in the know do not wish to rush ahead and shoot themselves in the foot, while some believe that the decision on the Governor's departure could be announced at the next session of the Federal Assembly. Even though they don't deny that changes are in the air, more cautious souls don't believe that they will happen very quickly, and recall that on several earlier occasions it had been left to the Governor to decide: if he would remain with his stand that under the given conditions he couldn't continue normal work or find a last minute solution which would enable him to continue as head of the NBJ and in deciding on monetary policy.

There were such cases last year, or more precisely, in the second half of 1994 when the euphoria over the stability of the new dinar was faced with a return of inflation and the black market rate of the national currency.

In the first case a clash broke out between the NBJ and the Serbian Government, and was conducted between the two sides' main protagonists. The clash between the Governor and the Serbian PM reached a point when the two men stopped greeting each other in public, so that Serbian President Slobodan Milosevic had to get involved. The reconciliation was a temporary one and the President has had to intervene again, but this time, according to those who claim to be well informed, it has been left up to the Governor to decide if he'll stay in office in spite of the fact that he believes that the policies of other centers of economic authority are endangering the policy of a stable dinar.

The Governor faced a similar dilemma in autumn 1994, but instead of withdrawing chose to become involved by heading working groups for salaries, pensions and taxes, i.e. of working out the concept of Serbia's economic development in the 1995-1997 period - a concept which President Milosevic had previously dictated to a group of Serbian and Federal officials. The groups finished work in mid April when Governor Avramovic said that the results had been sent to the person who had commissioned the research, i.e. that it wouldn't be correct to inform the public of proposed changes in current policy and the economic system before the President. The President hasn't yet said anything, and late last week the Federal Government issued a statement which doesn't make it clear if Avramovic and the working groups are being praised because there is nothing serious or important in the results - or if they are being turned down with general praise and the promise of setting up new committees to elaborate the proposed novelties.

The Federal Government reviewed the "Note on Economic Growth in the 1995-1997 Period", and this document has been presented as "Dr. Dragoslav Avramovic's assessment on the basic results of the working groups, and the Governor's analysis of the current economic situation, its prospects and roads to be taken in future". It remains unclear if the personal character of the aforementioned "Note" which the Government underscores in its announcement, is the reason for a month-long silence on this document.

Governor Avramovic's "Note" has not been published or publicly interpreted so far - and it still remains marked as "Top Secret". However, the author has made sure that the contents of the "Note" reach a wider public, in the interests of the people. Late last week the Serbian Academy of Arts and Sciences (SANU) debated the second phase of "development, efficiency and social justice".

Even though he didn't specify that he was interpreting his "Note", Governor Avramovic seems to have done just this. Reporting briefly on the work of the working groups, Avramovic praised the agreement on collective contracts and other categories in the sphere of salaries; with regard to pensions he underscored a firm commitment for the renewal of stable funds which should be financed from privatization - if it continued, as he said; with regard to changes of the tax system the Governor urged the abandoning of the system whereby the state takes money from economic subjects before knowing if they have earned it or are suffering losses; he said that a lot less had been proposed than he had hoped (he explained and justified this with the current accounting system which, as he had been told, enabled firms to present business results as they found convenient).

The Governor did not say openly why the six months' work by scores of experts ended this way, and why some who didn't understand the material had joined the working groups. He ended his report in SANU by expressing surprise that the system here was functioning at all, and the assessment that this miracle can be normalized only by resolving problems which have remained unresolved. This, in simplified terms, covers the entire foreign currency area, a different economic approach to wheat and electricity, reducing public expenditure to half the present amount and a different price policy.

Avramovic is disappointed with the unsuccessful attempts at a systematic repaing of spent foreign currency savings in state banks, and believes that without this there will be no trust in domestic banks and a new concentration of free capital. The Governor is probably confused by the dinar's numerous rates which suit those enterprises which are considered national economic giants.

To all intents and purposes, the present Governor will not meet with former Yugoslav Prime Minister Milan Panic's fate - who after being met with accolades was then practically thrown out of the country by the same regime. Dragoslav Avramovic will be seen off with praise, which he deserves, and perhaps the title of the Serbian President's special advisor for, shall we say, relations with international monetary institutions. In any case, the later he leaves, the higher the inflation that will see him off, and the lower the value of the "Avram" (new dinar, dubbed thus after the Governor).

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