From: malenovi@plains.NoDak.edu (Malenovic Nikola V.)
Newsgroups: soc.culture.yugoslavia
Subject: Economy ( VREME NDA 15 Sep 1992 )
Date: 15 Sep 92 22:02:15 GMT
Article-I.D.: plains.20374
Organization: North Dakota Higher Education Computing Network


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     "Vreme" News Digest Agency                  No. 51, September 14, 1992
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    Economy
    -------


                              WHERE IS THE MONEY


           The process of stripping  Milosevic's team of power must
           obviously  be speeded  up. It  would be  better for this
           team to be dismissed by Panic than by the hyperinflation

    There is no  hyperinflation which, at one moment and  in some form, does
    not confront a lack of cash.  It is possible that this hyperinflation of
    ours has  still not come  up against a  shortage of paper  and color for
    printing  money,  although  this  should  not  be  ruled out. This July,
    compared to last July, wholesale prices were higher by 11 964.6%. By the
    end of the  year this growth is to  amount to 50 or 100  000%. Who could
    print enough cash  for such an explosion of a  policy's failure, for the
    pointlessness of a  concept, for such a discrepancy  with reality? Today
    no one should be surprised by the fact that cash accounts for 38% of the
    overall  amount  of  money  in  circulation.  In  normal  economies this
    percentage ranges between 3 and 8 and at the time of prime minister Ante
    Markovic we did manage to lower it down 20%. In order for payments to be
    made with credit cards, checks and dinar transfers we would have to have
    goods in  stores and not  in the  streets,  there would have  to exist a
    realistic  exchange rate  and a  monopoly of  the dinar  on the domestic
    market,  the legal  order would  have to  be "unified",  insolvent banks
    would  have  to  go  bankrupt,  budgets  would  have  to  announce their
    bankruptcy  and find  new creditors  and new  managers. In  short, there
    would have to be created a state in which people have confidence. In the
    technical sense, if you go to a bank  today and if they tell you that on
    that day  give out only  a one thousand  dinar bill in  cash per person,
    this probably means that something is going on between the central bank,
    the republican  national bank, the  service for payment  operations, the
    budget,  the pension  fund, the  refugee funds,  the army,  big firms on
    compulsory  vacation and  between banks  themselves. The  fight of these
    institutions  over cash  simply means   that they  all spend  money that
    doesn't exist - fictitious money. And according to the accounts of prime
    minister Bozovic's economy, there are more than plenty of cases of money
    being  fabricated. The  tragic farce  with the  financial results of the
    economy in the first six months of  this year can best be illustrated by
    the following example. According to the accountancy which keeps track of
    negative  exchange rates  differences as  it pleases,  in the  first six
    months of  this year, the Serbian  Oil Industry achieved a  profit worth
    5.7 billion of the newest dinars,  which accounts for 12% of its overall
    income and  over 73% of  its fixed income.  If this were  really so, one
    could say that not even Dilinger in direct operations with Chicago banks
    had so much  business success and such a  rate of profit. Unfortunately,
    to put it mildly, these results are an outright lie. The only thing that
    is  not known  are the  true losses  of this  state-owned firm.  Central
    banking was  informed a few  days ago  that  it is to  print 160 billion
    dinars  for  buying  up  the  autumn  crop  (in  order to illustrate the
    "proportions" of this  let us recall that the  federal budget is planned
    to be around 63 billion dinars from  August 1st to the end of the year).
    Most of the amount is to be  given in cash because neither the commodity
    reserves nor  the peasants will accept  paper, but only cash  (and Dusan
    Mitevic, director of the commodity reserves didn't even return the money
    with which he could  not buy up all the wheat). Who  could print out and
    distribute all this when, at the same  time, cash also has to be ensured
    for a  million people who  do not produce  anything, for half  a million
    clerks for whom it is impossible  to collect taxes, a million pensioners
    whose pension fund is empty and  over indebted, half a million refugees,
    two million Serbs on the fronts in  the Krajina regions, and the 650 000
    unemployed  people  also  have  to  be  helped  somehow.  In the case of
    agriculture the money-issuing policy at least has some information about
    the  production.  From  the  industry  it  practically  has  no  serious
    information except for the fact that the level of production is by 30 to
    40% lower than that of two years ago. What kind of "monetary projection"
    can  one speak  of then?  The process  of stripping  Milosevic's team of
    power must obviously be speeded up. It  would be better for this team to
    be dismissed  by Panic than by  the hyperinflation. Federal vice-premier
    Oskar Kovac said:  "We will ask whether you want  a program for everyone
    to survive  or whether you want  an anti-inflation program. You  have to
    choose one  or the other". He  was not precise. He  should have said: we
    have already had a program for  survival and it failed, which means that
    we need an anti-inflation program. Because, in a country with a national
    product of 500 dollars per  capita where public expenditures account for
    300 dollars, everyone would like to  survive, and those who spend always
    have more votes. Someone could say  that it should not be forgotten that
    June's  inflation of  100% dropped  to 42.4%  in August  and that on the
    black  market the  DEM exchange  rate has  been standing  at 280  to 300
    dinars  for a  month now.  Nothing unusual.  When a family's breadwinner
    falls sick, first they cut his salary and then one must also pay for his
    care,  medicine, and  so on.  When the  breadwinner eventually  dies, at
    first  the  family  experiences  financial  relief.  The export-oriented
    economy and the industry dependent on imports are practically dead which
    has  brought "relief"  to the  black market  since it  was pressured  by
    demands. In the  first seven months of this  year "street hard currency"
    had  to be  used practically  to make  up for  the entire  foreign trade
    deficit (1003 million  dollars). Earlier on, in the  spring, the monthly
    deficit accounted for as much as 200 to 300 million dollars, but in July
    it  fell to  only 50  million dollars  (exports -  119 million  dollars,
    imports -  173 million). This  means that when  exports and imports  are
    fully  suspended,  and  last  week  the  EC  introduced new measures for
    tightening the  blockade of Yugoslavia,  Serbian prime minister  Bozovic
    will be  able to proclaim a  new success - the  elimination of the trade
    deficit and  the entropy of  the black market.  This, of course,  can be
    achieved only  with the help of  the poverty among the  population which
    can also not boost the demand for hard currency. There is no cash. It is
    not unlikely  that, over the next  few days, everyone will  get "scared"
    because  of the  general economic  die out  and that hyperinflation will
    once again be stimulated by new doses of money. No use.
                                                            Dimitrije Boarov


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     "Vreme" News Digest Agency                  No. 51, September 14, 1992
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