Avramovic's Program Put Off

The Federal Government on Saturday adopted some of the economic measures proposed by National Bank of Yugoslavia (NBY) Governor Dragoslav Avramovic for several months now and as of a month ago, by the NBY Council. The following day, the central bank also proclaimed steps it would take within its competences. None of the government officials have commented the vital topics of the concept of updating the economic system and policy, known in the public as "Avramovic's Second Program" and focusing on the privatization of the socially-owned economy and part of the state-owned sector. It turned out that no-one is interested in it, although privatization has been the chief topic of all political and expert gatherings for weeks now.

The Federal Government decided to depreciate the value of the dinar: one German mark is now worth 3.3 dinars on the NBY list, just like on the unofficial market. Also, the dinar now has a single value in all transactions. The rest of the Government decisions were mostly merely mentioned in the statement issued after the Saturday session and serious assessments of their consequences are not possible until the public is informed about them in greater detail. For instance, the Government said that the "import taxes have been considerably reduced", that they now range between 2% (for medications, raw and production materials, spare parts which are "insufficiently" produced in the country) to 30% (for luxury consumer goods). Who will profit from these reductions is yet to be seen, but it should be borne in mind that the lower import duties are calculated at the new, higher rate of the dinar. Also, the statement says that the "exports of domestic goods are almost entirely free", that only two percent of the commodities are still under the contingent regime, and that "the import of commodities in this sphere of the Program implementation is considerably liberalized in keeping with the principles of market economy". The Federal Government also announced the draft Federal Budget for 1996: the budget is to comprise 9.5% of the estimated Gross National Product and overall public consumption is to exceed 47% of the Yugoslav GNP.

The following day, the NBY adopted measures to prevent the insolvency of commercial banks and eliminate the widespread practice of so-called daily debit. No mention has been made of putting the Payment Operations Administration under the NBY's control, although the former has several times been publicly qualified as one of the centers permitting the insolvent banks' operations, thus generating the grey issue. However it may be, the NBY Council pledged it would first help commercial banks overcome their problems and then rigorously preclude insolvent banks' existence.

In his Program, Avramovic mostly talked about three correlating wholes. The first regards putting commercial banking in order, the exchange and interest rate policies and the introduction of financial discipline. The second pertains to everything needed to achieve the proclaimed goal: the creation of an open market economy as the only way of increasing the economy's efficiency and competitiveness. To that aim, for instance, the Governor has demanded an end to all export and import licences, major reduction of import barriers (with the highest import duties not exceeding 20%), the liberalization of foreign exchange transactions and all other measures needed to make the dinar truly and fully convertible. The third part of Avramovic's program focused on privatization, i.e. "democratization of ownership relations" (because some important people obviously cannot stand the word "private" unless it pertains to their own property, which, to their opinion, can be accumulated to the point of comprising all of society), attracting foreign capital, reduction of domestic fiscal burdens, an end to state and para-state price monopoly/arbitrariness/violence*****, and, in general, all other economic categories barring exceptional and justified cases (monopolies, the economy's public sector, etc.).

The initial reactions to the new measures - except the frivolous statements such as President Lilic's, that no-one in Yugoslavia opposes private property, or Radoman Bozovic's, that he and some academicians together drafted a proposal to abolish socially-owned property - can be qualified as either mere propaganda or honest. The former group includes a multitude of economists glorifying "Avramovic's Program" on state TV; the latter group is made up of economic experts, all of whom support the Governor but draw attention to the fact that the program has not been adopted in its entirety, that not even some of its essential parts have been adopted.

Maybe it will soon transpire that the President of Vojvodjanska banka Zivota Mihajlovic had been the most lucid when he jokingly (?!) said that the authorities have so far blamed the sanctions for the failure of their economic policy and would from now on blame their consequences. True, Mihajlovic had uttered that statement before the latest government measures were adopted.