ECONOMY

OECD commends Yugoslav efforts

PRAGUE (AP) – The Organization for Economic Cooperation and Development (OECD) yesterday lauded Yugoslavia’s progress in rebuilding the war-torn economies of Serbia and Montenegro over the last year, but warned that the country must continue with reforms and attract foreign investment. «Difficult decisions have been taken to implement some structural reforms and the economy has been substantially liberalized and stabilized,» the OECD said in its annual country assessment. «It takes time for structural reforms to become effective and new institutions to take root. In due course, reforms will benefit domestic firms and industry,» the report said. The OECD, however, warned that unresolved questions about future ties between Serbia and Montenegro and the relationship between the federal and republican governments are hampering the progress of reforms. The OECD noted that the National Bank of Yugoslavia has succeeded in ending nearly a decade of hyperinflation in Serbia, stabilizing the exchange rate of the dinar and building new foreign reserves. In Montenegro, where the euro was adopted as currency, there is a little room to operate an independent monetary policy, the report said. Relations with international creditors have largely been repaired after a decade of broken contacts, and questions about outstanding foreign debt have been settled, according to the OECD. The report notes, however, that the country remains heavily in debt to foreign creditors, while the financing of public budgets is strained by high levels of mandatory social spending.