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Yugoslavia: IMF And World Bank Considering Membership For Belgrade

A team of officials from the IMF, the World Bank, and the European Bank for Reconstruction and Development are in Belgrade this week to study what it will take for Yugoslavia to join their institutions. RFE/RL correspondent Ron Synovitz examines the obstacles to membership faced by Yugoslavia's new leadership.

Prague, 25 October 2000 (RFE/RL) -- Senior officials from international financial institutions have been meeting with Yugoslavia's new leadership in Belgrade this week as part of their first fact-finding mission there since the ouster of former Yugoslav President Slobodan Milosevic.

The team that has been meeting with aides of newly-elected Yugoslav President Vojislav Kostunica includes representatives from the International Monetary Fund, or IMF, the World Bank, and the European Bank for Reconstruction and Development, or EBRD.

Two of Kostunica's allies, Serbian politician Zoran Djindjic and economist Miroljub Labus, have said they think Yugoslavia can join the IMF before the end of the year. But so far, the IMF is insisting that there is no timetable for Yugoslav membership in the fund.

The senior EBRD official in Belgrade this week, Olivier Descamps, told RFE/RL he expects a series of similar missions in the coming months before Yugoslavia is formally admitted to any of the institutions.

IMF spokeswoman Conny Lotze says the future Yugoslav government must meet three conditions to join the fund. First, Belgrade must organize a schedule to repay $128 million of debts to the IMF. Also, the independence of Slovenia, Croatia, and Bosnia-Herzegovina must be recognized and, third, the IMF's Executive Board must determine that Yugoslavia can meet its financial obligations.

The IMF and World Bank experts visiting in Belgrade are trying to clarify questions on Yugoslavia's ability to pay its debts.

It is the first such fact-finding mission since Yugoslavia was expelled from the IMF and World Bank in 1992 under international sanctions imposed because of Belgrade's role in the wars in Croatia and Bosnia-Herzegovina.

Johannes Linn, the World Bank's vice president for Europe and Central Asia, says the Milosevic regime prevented foreign experts from collecting reliable economic data in Yugoslavia for nearly a decade. Speaking in Prague last month at the annual meetings of the IMF and World Bank, Linn said:

"Serbia is not a member of the World Bank and we don't have access to the kind of information, more generally, and dialogue that we have with other countries."

But the international institutions did not forget about Yugoslavia's unpaid debts. In addition to the $128 in arrears to the IMF, Yugoslavia also owes about $1.7 billion in overdue debts to the World Bank.

The World Bank also reports that Yugoslavia's total foreign debts at the beginning of last year were about $14 billion. That includes the money due to international institutions and foreign governments as well as to private foreign lenders.

By comparison, the latest estimates say hard-currency reserves in Yugoslavia's central bank stand at about $500 million.

Those figures suggest that the debts left over by the Milosevic regime could severely hamper attempts by the next Yugoslav government to revitalize the economy unless Belgrade receives IMF support.

Yugoslavia also needs the kind of debt-restructuring agreements already offered to its Balkan neighbors during the last six years. Such agreements require membership in the IMF.

Descamps, who is the EBRD's regional director for Southeastern Europe and Central Asia, told RFE/RL that a top aide of Kostunica already has communicated Belgrade's interest in joining the international financial institutions.

"The IMF is considering membership in a relatively short period. However, the World Bank is saying this will take a bit longer because the World Bank has, among other things, a significant amount of arrears that it would have to try to tackle and find a solution. [Yugoslavia] indeed wants to join the international financial institutions as soon as possible. They want to normalize their diplomatic relationship with the whole international community."

Yugoslavia does not have debts to the EBRD because it has never been a member. As a result, Descamps said he expects Yugoslavia to qualify for EBRD membership as soon as changes are made to its constitution that demonstrate a commitment to multiparty democracy, pluralism, and a market economy.

Meanwhile, Yugoslavia has made progress toward joining other international organizations. Bodo Hombach, coordinator of the Balkan Stability Pact, says Yugoslavia will formally join his Brussels-based group tomorrow.

Hombach also notes that the Organization for Security and Cooperation in Europe plans to accept Yugoslavia as a member as soon as the end of next month.