Chewing on the Receiver

A week ago, the Serbian government proudly announced several times that it has already distributed 1.234 billion DM of the total 1.568 billion DM obtained from the sale of 49% of Telekom's stocks. That is, it's Fund for Development has distributed it. Those who know that the co-owners of the telephone company have so far paid four fifths of the total 1.568 billion, and that the balance should arrive by the end of the year, will easily make the calculation and find out that everything received up to now has been distributed.

How to spend the money received this way? First of all, it would be nice to give some of it to the pensioners. The pensioners are, in fact, so important for the government, that the law on ownership transformation says that one tenth of the money obtained from each privatization should go to the pensions fund. However, it was obviously estimated that for the time being it is enough to give them 150 million DM (the equivalent in dinars, of course), and that there's still time for the balance of 57 million. Anyway, isn't the sum of 150 million DM that was paid to the fund for healthcare also manly intended for them? Let them be healthy for their government's sake, and let them be dependent on the general healthcare.

Although a caring head of the household could do miracles with this amount in an economy where activity is close to absolute zero, the rest of the money nevertheless turned out to be insignificant for ten million people who hunger for everything. This is why the regime will need a new currency inflow very soon. So it would be worthwhile to make some investments in order to enhance future merchandise.

For roads, 160 million DM (100 for the repair of existing ones, and 60 to resume the construction of the new ones), 100 for the railroads, 30 for the electric power industry, the same for the gas supply network. Of course, all these investments will provide jobs for many idle construction and industrial, no doubt "socially owned" companies.

Agriculture must not be forgotten either. 100 million DM is earmarked for Program II, for the restoration of mechanization. The Directorate for Goods Reserves is in charge of conducting this program, and will distribute the money to factories (26 of them) which will deliver machinery to farmers, who will in turn pay the loan back to the Directorate in goods. Is the Directorate under obligation to pay the loan back to the Fund? Does that mean that it will have to sell all the foodstuff obtained in this way? Maybe through some well known trading companies? The Directorate has also received 75 million DM to buy up wheat and 10 million for wool and cotton necessary for the textile industry.

Agriculture received another 54 million DM from the Fund for the Development of Livestock Breeding, for the breeding of milch cows, fattening bullcalves, pigs and layers. The Fund has distributed the money to 147 cooperatives and livestock farms. Some of them, like the Vizelj farm, which has 30,000 pigs, received 100,000 DM, and says it will not use the loan at all.

Another 29 million DM is intended to buy up the berry fruit crop. The precondition for this loan was an export contract, but some, as for example Hladnjaca from Kraljevo, did not even submit this. Many dissatisfied fruit processing companies claim that it is unbelievable that some have completed contracts for fruit export in the amount of 2.5 million DM, as for instance Elan from Srbobran, the company which deals exclusively with vegetables. All 28 companies which got the loans are "socially owned", and all of them operate with losses, except Delises from Vladicin Han and Frikom from Padinska Skela.

Further 257 million DM was distributed to industrial companies, and only to those with already contracted export jobs. The government claims that this amount will enable them to actuate 1.251 million DM worth of export arrangements. Maybe, but it can hardly be concluded that the yield will be 4.5 DM per each one invested, as they claim. Even if the producers really invest all of the money into export jobs, we are still talking about already initiated jobs for whose completion there is not enough money, and not about the financing of the entire business arrangements.

Will all of this money really serve the financing of exports? One of the conditions for getting the loan was that the directors sign a statement about taking over responsibility for restricted spending of the money and regular payments in installments. They guarantee this with their personal property. In case spending goes beyond the restriction, the sanction is immediate payment of the debt balance to the Fund. "We will not allow spending beyond the specific restricted purpose," decidedly says Slobodan Radulovic, vice president of the Republic's government.

But deadlines for paying back the loans are short. The shortest is three months, and the longest nine. Only users from the agriculture industry have longer terms, up to 36 months, depending on what the money is intended for. And even they complain that the deadlines are too short, and that positive effects do not show up that fast in their branch of the industry. A grace period (a period of time between the date money is received until the beginning of payments) is not mentioned anywhere, but one Belgrade company claims that the Fund will wait six months.

All the recipients are "socially owned" (the biggest ones, like Simpo which got 10 million DM, are directly controlled by the minister), mostly losers, with big debts. Although some banks, like Agrobank from Leskovac, have expressed understanding regarding this situation and postponed loan payments for those loans from Fund resources (for example, to Porecje from Vucje, one that symboliyes a purely political investment), it can hardly be expected that anyone can decide to write off this debt.

After the news that the money is in spreads, first the workers will jump at poor directors, because they haven't received their wages for months. Then the creditors will arrive, who will refuse to deliver raw material and semi-manufactures or some other component necessary for the realization of the contracted job, until the old debts are settled. Some companies already intend to reprogram their debts from these loans. They will pay the existing debts with enormous interest, and remain indebted only to the Fund, which has, as though it has no expenses of its own and as if inflation will really only reach the projected 3-5% level, estimated the interest at only 4% yearly. If they resist all temptations, successfully conduct the export programs and succeed to pay the interest regularly, companies can count on the renewal of the loan, and that the received assets will become their permanent circulating capital as long as they effect regular payments of installments.

But, how will the directors free their companies of the load of past failures? Maybe by simply converting the debt into shares? Either that, or the alternative bankruptcy - that's the only destiny that awaits those who do not stick to the agreed conditions. This is probably the scenario for the majority, since all those companies leak out the sides, and when there is any monez at all, it simply slides away.