ECONOMY

Financial row in Yugoslavia

BELGRADE – Yugoslavia’s central bank governor yesterday blasted plans to deny Serbia direct contact with world financial organizations once the Yugoslav federation is recast as a looser union of its two republics. Bank governor Mladjan Dinkic was throwing down the gauntlet to Serbian Prime Minister Zoran Djindjic, who has agreed to allow a Montenegrin to represent the new union in international bodies such as the International Monetary Fund (IMF). Serbia and Montenegro, the only two remaining Yugoslav republics after the conflicts of the last decade, agreed last March to stay together for at least the next three years in a new loose union, but they have yet to finalize the deal. The two have been wrangling over which one would lead contacts with the IMF. «The struggle is over who will be the fiscal agent – the institution contacting and servicing payments to international financial bodies,» Dinkic told a news conference. Political elites led by Djindjic and his Montenegrin counterpart Milo Djukanovic have agreed that a new joint ministry for foreign economic relations would be the fiscal agent. The post of minister has been earmarked for Djukanovic’s party. But handing the key post to someone from the much smaller republic alarms some Serbs who fear they will not get a fair deal, particularly as Djukanovic has made clear he wants the new union to be a stepping stone toward Montenegrin independence. Dinkic said that, in a letter to local authorities, the IMF had recommended that the Serbian National Bank act as the fiscal agent in consultation with the Montenegrin central bank. «All those who allow Montenegro to take over communication with the IMF and other financial institutions will prove to be traitors of Serbian national interests,» Dinkic said. «But for some strange reason, Djindjic’s party agrees to have Montenegro in charge of that ministry and those contacts, although Montenegro does not hide that the loose union will serve as a springboard to its independence,» Dinkic said. Montenegro ditched the Yugoslav dinar in November 1999 and has since set up its own non-issuing central bank in charge of supervising banks. It uses the euro as its legal tender. Djindjic has also been signaling he would like to ditch Dinkic and create a completely new national Bank of Serbia rather than simply renaming the Yugoslav National Bank and keeping the current governor in charge. «Why destroy the entire institution because of Dinkic? Why not launch a no-confidence motion and if I have acted wrongly, the Parliament will replace me,» Dinkic said. «Some people in Serbia simply want no independent central bank. The whole issue sends a bad signal to investors.» The festering disputes have already delayed a couple of IMF loan tranches and a fresh credit portion from the World Bank to support the Serbian budget. «The IMF board of directors will not discuss Yugoslavia before March. The World Bank has postponed its mission twice. Although there is no immediate effect, problems will come with a time lag and budget beneficiaries will feel them,» Dinkic said.