Privatization of the Dinar

The Federal Government on Wednesday adopted current economic policy measures proposed by the National Bank of Yugoslavia. A day earlier, Vice Governor of the National Bank of Yugoslavia, Ratko Banovic, said in the Chamber of Commerce of Serbia that the measures were more or less in accordance with all the governments but that it was not yet the time to make them public. Banovic only pointed out that, despite a specific blockade that the Yugoslav economy was in, the primary issue would not be used and that insolvency of banks would be taken care of in other ways.

The public has been informed about the contents of the recent economic and monetary policies by Governor of the Central Bank, Dragoslav Avramovic. The governor last week on two occasions spoke about what the monetary and economic authorities were preparing. He assessed that insolvency of the economy and banks was one of the most urgent and key problems (the other two being reconstruction of the Yugoslav economy). The Central Bank proposed measures for removing insolvency of business banks. According to the governor, the Central Bank should issue bonds to cover the sum needed by business banks. In this way, according to Avramovic, the primary issue would not be used.

PRESSURES: The first reaction of experts is: this does mean using the primary issue to cover the losses. It is true, though, that this is the least bad choice from the usual selection of ways to devaluate the Dinar. Experts sigh about the covering of losses by Central Bank bonds, hoping that one day everyone here, including the state, will have to fulfill one's obligations, and the sooner the state starts paying back its debts, the shorter the procedure.

The conclusion is that the Central Bank has once again yielded under the pressures of those who, in normal circumstances, would go bankrupt. The governor admits that the pressures are great and various, but this can be no excuse for a public official to give in. It is normal for officials to be exposed to various kinds of pressures but also to repel them for the benefit of the public interest which they are to protect. It is also clear that the losses of certain commercial banks will be covered by no one else but those companies and banks which did not waste their capital and by the population through additional taxes. This is where the next question arises: why does the government have double standards for certain banks and companies? Since hardly anyone believes in the government's ideological determination for a certain system, another dilemma follows: is the government's only concern to stay in power or are material interests of individuals at issue.

CHEAP PROPAGANDA: At the same time, the government through its media informs the readers, listeners and viewers of the "good" news on the abundance of low-price meat. A "negative" example has been found, though: a butcher in a small town did not immediately act in accordance with the government's decision, but the nation should altogether be satisfied because a provincial butcher certainly does not represent Serbia's meat market. These media, however, have not mentioned that the price of meat had been almost doubled before this week's reduction of prices, so the current prices are still 60 to 80 percent higher than the initial ones. To avoid confusion, we are here speaking only about the propaganda machinery, not the "real" price of meat.

Without some growth of prices, butchers' shops would, no doubt, be empty. This is a consequence of the state's violence over prices: so we have - have not sugar, oil, bread, etc. The problem with the price of bread has a special dimension. First, Serbia's government several weeks ago insisted on maintaining the population's standard of living by keeping the fixed price of bread and promised to sell the wheat from state reserves at 0,30 Dinars per kilo and thus forced the bakers to sell bread at the old price. Early this week, however, the government allowed the price of bread to be raised by about 20 percent which, according to state-owned bakeries, will still mean doing business with losses. But the state-owned bakeries can at least hope that their losses will be covered, which private bakers cannot even dream about. According to Belgrade bakers, only a few of them have received the promised flour and the current price of flour is 0,70 Dinars per kilo. There is also a shortage of yeast. It is assessed that it will be on sale again when the price is doubled.

Nearly all private bakers in Belgrade see this as strangulation of private business. Asked why the authorities are doing this to them they have no specific reply except: "Perhaps it is our turn now." This story, compared to the covering of inflation in the cases of oil, meat and other goods and services, is special because it coincides with Serbian government's sudden turn toward privatization. More accurately, reliable sources have quoted the head of the Serbian state as saying: into privatization. The race has begun and every day someone offers a new concept. Even Radoman Bozovic has managed to push his way into the Federal Government's competition with the expected proposal: first make everything state property, so as not to harm the workers, and then begin privatization. The Democratic Party leader at a panel discussion on Wednesday said that the government held promises of privatization in one hand and foreign trade permits in the other. In a number of comments on the government's turn and the proposed models of privatization, the organizer of the panel discussion did not fail to reiterate that last year's Law on evaluation of the privatized companies only helped slow down privatization. However, there are more and more experts who, like Bozidar Cerovic insist on expert and not ideological option for or against privatization, i.e. for one or another way of carrying it out.

It is now up to the Government to adopt such an approach and to work in the best interest of the national economy and in the best interest of the entire population, or at least of its majority.