Crash Of The Foreign Exchange Reserves

Since the Yugoslav Parliament asked on March 10 for the announcement of the moratorium on payments to foreign creditors, as the foreign exchange reserves fell to around 2.5 billion dollars at the beginning of March, the entire maze of political issues concerning the continuity of the old and the creation of new Yugoslavia - has boiled down to a single question: who can raise some money in the world to pay for the preservation of "the crippled Yugoslavia" or for the financing of some sort of a new federal state. Can Slobodan Milosevic, the Serbian president and the unifier of Serbia and Montenegro get from someone in New York, London, Paris, Frankfurt or Tokyo at least 15 million dollar daily credit for a steady operation of the industry, transport, health service and the like?

We can make the question more general: can Slobodan Milosevic, even if he signs everything that Mr. Cyrus Vance and Lord Carrington present before him, get any money on the basis of the application for credit written by Dr. Radoman Bozovic, the Serbian Prime Minister? Because, it is a long way from the attitude in which nobody has anything against Milosevic's desire to preserve a Yugoslavia of sorts to the actual receipt of a credit line worth 300-400 million dollars, which is the monthly amount we have been short of.

If Milosevic and Bozovic do not receive a single penny, they are practically "done for".

When Ante Markovic was elected president of the federal government (March 16, 1989) the Yugoslav foreign exchange reserves amounted to around 3 billion dollars. When he was dismissed three months ago the reserves were pretty much the same.

So, Markovic has left the exact amount which he had found when he took the office - reducing the foreign debt in the meantime by around 5,5 billion dollars. Yugoslav export receipts in 1990 amounted to around 30 billion dollars on the annual level, shops were well stored, the average salary was 800 marks: all that was achieved although the "industrialization" of the country stood still.

How could that have happened? Markovic gained the trust of the international community. That is the reason why the exchange rate was stable, why in 1990 alone the Yugoslav foreign exchange reserves increased by more than 6 billion dollars - because the country got loans on the basis of the trust of the international community - from Yugoslavs, suppliers of goods from abroad and the world banks - although the Yugoslav economy was the same as it used to be - in a word, hopeless.

Can then Slobodan Milosevic be the man who will act as a pivot for "the national interests" and the interests of those who are supposed to give us the money to survive? According to one hypothesis which claims that Mr. Vance promised him that if he signs all the papers.

The governor Dusan Vlatkovic dramatically warned the Parliament last Tuesday that foreign exchange reserves in January and February alone fell to around 800 million

dollars. One hundred and thirty million dollars were given for the interest and annuities to foreign creditors which are guaranteed by the federation; the federation (the army, the diplomacy, planes, hotels, daily wages) has spent 200 million dollars, around 100 million dollars were (probably) spent for conventional liabilities "membership fees", banks, railways and other, while 390 million dollars were spent on oil, drugs, coal and raw materials.

On the basis of the aforementioned data, it turns out that the remainder of Yugoslavia will be short of 15 million dollars a day (since the monthly imports of around a billion dollars and export of around half a billion will keep on running at the same level). That is big money: the amount lacking each month equals the price of 100 000 Yugo cars (that is the present annual production). Can Milosevic raise that amount of money from foreign creditors? Even if he gets rid of Bozovic and his policy of nationalization, regulation, freezing, control, prohibitions...

At the annual rate of inflation of some several tens of thousands, "the printing stage" of financing is coming to an end. Can Slobodan Milosevic, surrounded by the "blue helmets", be the one who will get money from those who have a real financial power?