Yugoslavia is facing economic problems

Press, 5 September 1980, Page 12

Yugoslavia is facing economic problems

By

PETER RISTIC

in Belgrade

An -. urgent' warning went out from the hospitals in Belgrade; the other dayr medical supplies were running out and lives were at risk. Operations were being postponed because 300 of the 1400 drugs stocked were completely unobtainable. The main cause of the problem was that pharmaceutical companies did not have the hard ’ currency for essential imports. The medical alarm call was swiftly answered with several million dollars to pay off all existing debts and to meet the cost of drugs and treatment for the rest of the-year. '■ / The story illustrates the seriousnes .of the economic • situation facing Yugoslavia in the post-Tito era. Yugoslavs have to think back years to remember a time when there was such a shortage of consumer goods. Coffee — considered an essential in the Balkans — is in scarce supply. The shortages have driven Yugoslavs, to embark .on ; smuggling' forays into Italy. Deliveries of detergents are sporadic,' and there are'. often queues for sugar- and cooking oil. The shortages bear little resemblance to those in Boland, ' but point to the larger problems lurking : . behind the 1 , troubled economic scene. Some factories, particularly in the metal industries, have gone on short-time working; others have even halted production. Important investment projects have been. halted. The Belgrade underground railway lies half finished;: cranes, hang idly over the shell That was ; to . be .the capital’s ultra-modem clinic. Many - of Yugoslavia’s economic difficulties have-the . appearance of being linked to

the death of Tito in May. The shortages and the shorttime working appeared in the final days of his life, and one month after his death there was a massive 30 per cent devaluation. The death of the 5 President brought everything finally to a head, but the problems had been there for a long time. The Prime Minister, Mr Vaselin Djuranovic, in a recent speech, bodly pointed his finger at policy decisions taken years back. He noted ' the, progressively worsening relationship between exports and imports started back in the. mid-19605. That was the . time 7 of ; . the so-called economic reforms and the transfer of most economic decision-making, to the six internal republics. The State President, Mr Mr. Cvijetin Mijatovic, appeared to reinforce this view in a speech last month when he identified the main current problem as the difficulty in reaching agreement among the six republics and two federations on the the economy. policies needed for stabilising . Past policies have caused a duplication and excess of investment., The .inequalities between the - developed and under-developed, of the country have increased. Lack of national economic planning and co-ordination has meant 1 key ./sectors — such as the Yugoslav extractive and energy industries and agriculture— have been neglected, while industries draining the country’s foreign exchange resources have received too , much money., But while pondering the greater problems and promising more measures, officials . have acted to put a break , on the headlong slide into the arms of- Western bankers.

This year - Yugoslavia has . been put in a foreign debt strait-jacket, which is causing some ,of the current problems? Enterprises are forbidden to spend more foreign exchange than they are allocated or earn, even if it means halting production. But it is through export drives rather than tightening of belts that the authorities hope to keep the economy on - keel- and the foreign debt within reasonable proportions. Here there has been some success In the first six months of 1980 exports were up 12 per cent in real terms. Imports were down by the same figure. Devaluation has given a considerable boost to file tourist industry.. But success on one crucial, front is marred by troubles on another, galloping inflation. In June alone, prices officially rose 5.3 per cent, the highest monthly increase for 16 years. Commentators are predicting that the year’s end prices will have risen 40 percent. • Despite the problems, there is no sign ,of pessimism. Nor-. has the grumbling over the temporary shortages and ris-ing-cost of living been translated into ahythirijg approaching! what has taken place in Poland in recent weeks. There have been no calls for strikes. Many Yugoslav workers have even accepted cuts in wages in recent months — often of around 20 per cent — in the cause 6f ; “economic stabilisation.”' ‘

Despite the outward appearance of optimism, and . confidence that in a crunch the country can call on help from all sides, there is a general realisation, however, that worse is tb come.. —’ Copyright, London Observer -Service.