CZECHOSLOVAKIA ing involuntary trade credits to that country. The Hungarian government has also signed agreements with individual republics. These include mutual deliveries of commodities with Russia of up to US$670 million, US$50 million with the Ukraine and US$300 million with Kazakhstan for 1991. Performance on these agreements remains to be seen.

# _Other_

Tourism produced 20% higher convertible currency income than in theperiodJanuary-May 1990 despitea 12% decrease in the number of visitors. There has been a substantial inflow of convertible currency in the form of unilateral transfers from abroad for private individuals. In the first quarter of 1991 this amounted to US$200 million. It is assumed that some of these transfers represent export incomes of private entrepreneurs who underinvoice their export deliveries and who later get part of their export receipts from western partners in this form. This reduces their corporate tax and personal income tax liabilities. Convertible currency deposits of the population at Hungarian banks doubled within ayearandreachedUS$1.3 billion at the end of June 1991.

Hungary's approach to privatization is to sellenterprises to investors rather than distributing them to the population via a voucher tha r them toztie scheme. viMe pavatization of small businesses and the seheme.ivathepivatio cofpasmais ation busceinessesctess self-privatization of companies is proceedimg successfully and on track. A setback with one large, visible deal, thedelayof thesaleofa state-ownedhotelchain,illusrates some of the complexities that may arise in parficular cases. The sale exites arise in priua tax breaks allowing enterprises to offset rme cost of consta bako caling etprisenst Mofet the os o Bonstruction and capital improvements. Mhoreover, thle lNB has insisted that the new ownerof thechain mustrefinance subsidized loans obtained in the mid-1980s **to** finance construction at market rates. construction at mnarket rates.

<!-- Start of picture text --> Figure 19: Czechoslovrkle: RelotIve Exposure by<br>Creditor 1991<br>E . 21.4S%<br>20.34%<br>x<br>13 int o G Carwcis U OfdI 0 otw PrrvOte<br><!-- End of picture text --> Gross convertible currency debt of US$8.1 billion at the end of 1990 was little changed from the end-1989 total of US$8.2 billion although substantial movements in the debt position took place during the year. The debt declined to US$7.0 billion at the end of June as the payments difficulties of Bulgaria and the USSR in early 1990 led western banks to withdraw short term deposits from CEE countries, including CSFR. _In addition, importers preferred to pay in cash rather than use or renew trade credits, oreven prepay in anticipation ofthepreannounceddevaluation._ The total convertiblecurrencydebtincreasedtoUS$8.8billionatthe end of June 1991 from US$8.1 billion at the end of 1990. Large, medium and long tenn disbursements from official creditors were partially offset by valuation effects from the appreciation of the dollar. Short term debt in contrast, cntin o dle in19. The terBn repts that tisue o de i Ts staie ink reports that ~the Issuance of trade credits stabilized in 1991 after it declined steadily in 1990. Still, some Western banks continue to withdraw short term deposits.

_Table 8:_ CSFR External Debt (in US$ million)

|I|~~~~19|81=|198|I98|I99|199 1(e)|1222(f!|
|---|---|---|---|---|---|---|---|
|Convertible Currency<br>|5,568|6,656|7,281|8,183|8,085|9,251|9,827|
|External Debt of which<br>||||||||
|MLT<br>|2,877<br>|3,580<br>|3.875<br>|4,596|5,180|6,.808|7,444|
|ST<br>|2,691|3,076|3,406|3,587|2,905|2,443|2,383|
|By Creditor<br>||||||||
|IFIs<br>|27<br>|131|136|134|135|1,984|2,683|
|Bilateral|1,513|1,876|1,454|1,701|1,576|1,882|2,062|
|Commercial Banks of which|3,114<br>|3,927<br>|4,786|5,648|5,349|4,640|4,229|
|MLT<br>|1,202|1,456|2,164|2,795|3,120|2,738|2,440|
|ST<br>|1,912|2,471|2,622|2,853|2,228|1,902|1,789|
|Other Private Creditors<br>|914|722|905|701|1,025|745|853|
|Reserves ExcL Gold<br>|1,115<br>|1,382<br>|1,583|2,157|1,102|2,673|3,929|
|Deposits in BIS Banks|1.217|1,598|1,671|2,197|1,353|-|-|

Source: HF, Country Report dated November 22, 1991 16