World Financiers Turning Their Backs on Macedonia
IMF, World Bank and EU have postponed indefinitely the signing of The practically agreed arrangements causing harsh public reactions against and accusations of the current Government. FENI from Kavadarci finally sold for USD 2.7 million.
AIM Skopje, October 27, 2000
The major economic news coming from Macedonia this past week are "three hot slaps" which Washington and Brussels gave this country by postponing the already agreed financial arrangements for indefinite period of time, which literally shocked the public. First IMF postponed by phone the presentation of the arrangement to the Board, which means the delayed approval of the already agreed Agreement for PRGF and EFF loans aimed for the reduction of poverty and improvement of conditions for speedier development, each in the amount of USD 36 million. After that, through its representative in Skoplje, Marie Ellen Bricknel, the World Bank announced that it would follow suit of its "twin brother" unless the Macedonian Government honoured the undertaken obligations, so that the FESAL2 arrangement, in the value of USD 50.3 million, designated for banking and enterprise sectors reform came into question. The last in a series of disconcerting messages was official written postponement of the final round of technical negotiations with the European Commission for the finalisation of Agreement for Stabilisation and Association, the signing of which was scheduled for November meeting between the Union and Countries of South-East Europe in Zagreb. Thereby assistance in the value of some 80 million Euros promised to Macedonia for overcoming numerous macro-economic and development problems, has been practically blocked.
Perhaps more than "slaps" citizens of Macedonia were offended by the inappropriate reaction of the competent bodies, which caused great uncertainty and tension in the country. At first they were surprised and thus offered explanations which were hard to swallow, such as that the international monetary institutions had their hands full with Yugoslavia which was why Macedonia would have to wait patiently another 4 to 6 weeks. This was followed by an explanation that the Ministry of Finance was the one who asked for the extension of deadline for the operationalisation of new financial arrangement with the IMF and the World Bank until he received the instructions what was to be done with the budget surplus realised after the introduction of value added tax. Finally came the statement of "state treasurer" Minister Nikola Gruevski that IMF was considering the possibility of totally withdrawing from the country because "Macedonia is doing well on its own and achieving good economic results and therefore doesn't need anyone" which in the public opinion was "an absolute nonsense", culmination of arrogance and blindness of power-holders who were setting the stage for the final departure of international monetary institution from the country.
What will Macedonia possibly lose or gain by this? What will this mean for numerous enterprises which are groaning under the burden of outstanding liabilities; what will this mean for the repayment of external debts to creditors with the USD 40 million annual instalment and without any foreign currency turnover on foreign exchange stock markets; and what will this entail for the majority of citizens who find it increasingly hard to make ends meet with irregularly paid average wages of barely DM 100 and for the army of almost 364 thousand unemployed. No one of the competent people has even tried to answer this and many other similar questions. They mostly consider them as malicious and speculative.
Numerous and very harsh reactions of both the opposition and economic analysts ensued. They demanded from the Government coalition partners "to wake up form the deep sleep" and take off their "pink glasses" and face the reality which is not as they see and picture it to the world.
In contrast to Government ministers, local economic experts said that they were not surprised by such a turn of events. According to them reasons for such turnabout in relations between world financial potentates and Macedonia should be looked for in the behaviour of the "Coalition for Change", which in the last several months "has been working without any direction and mostly for their own personal and party business interests". Now, when Slobodan Milosevic's regime has fallen, the international monetary moguls no longer have reason to tolerate Macedonian "faked reforms". For them the last straw was the dissatisfaction with the USD 200 million budget surplus. They reminded that IMF was insisting on the balanced replenishment of state treasury rather than burdening economic subjects and maintenance of "debtor economy", which the government was favouring. They corroborate this by figures on enormous outstanding mutual claims in the national economy, unauthorised interventions in the wages of budget users, as well as monopolistic agreement with the "OKTA" refinery which has caused the spiralling of fuel prices in the country, threatening to trigger off the inflation.
They particularly mention stubborn insistence of the Government on certain measures which are contrary to the customary financial practice, like the breaking of inspectors into privatised companies with foreign share capital("Alkaloid" from Skoplje, "Tobacco Combine" or "Commercial Bank"), taking in of Directors of profitable trade companies for informative talks and allocation of property to enterprises which allegedly cooperated with Milosevic's regime. Combined with numerous incidents and even victims registered during local elections which, incidentally, are not over even after two months, as well as growing corruption and Government's poor reform potentials, which the World Bank pointed to recently - this move is crystal clear, logical and was to be expected, point out the analysts! Despite everything, they are not pessimistic. They believe that the October "hot slaps" from Washington and Brussels are the last warning to Ljubco Georgievski's Cabinet which, if it intends to remain in power, will have to correct its behaviour and carry out everything that is asked of it.
They base their optimism on the latest reports of the Government Commisssion for Structural Reforms and resolution of problems of major loss-making enterprises, as well as on the statement of Borko Andreevski, Minister of the Economy, who officially confirmed that the strategic partner has been finally chosen for FENI from Kavadarci. Thus, one of the main "tasks" assigned by the world financial policemen. More specifically, he explained that this, one time metallurgical giant which is now on its knees, would be taken over by a Consortium composed of the French firm SCMM and the German concern "Krupp-Tissen" selected from a number of candidates as the best at the international tender. A memorandum was immediately signed while, according to Minister Andeevski, the initialling of the Sales Contract was agreed for the first half of November after which the production of ferronickel would be re-started, the price of which (USD 7,450 at stock exchanges) guarantees profitability.
The new boss undertook to pay the state some USD 2.7 million and to secure the employment for all 870 workers, as well as not to shut down the factory over the next ten years. It will not be burdened by debts as they will be left to the state. There is no official data on the exact amount of these debts, but unofficially they are estimated to be around 70 to 80 million dollars! The new owners of FENI will pay for electricity 2.2 cents per kilowatt hour and are under obligation to invest USD 36 million in the modernisation of production process over the next five years. The Government said that it was satisfied with the reached agreement, while it remains to be seen what will the IMF and World Bank say. The analysts warn that if, God forbid, the agreement falls through, the country would face hard times of uncertainty and unrest, adding that Macedonia, which was until recently considered to be among the leading countries regarding the reforms, might be easily left at the tail of the Balkans. It is currently the only country in the region which for the last two years has not concluded an arrangement with the IMF and the World Bank, and did not seize its chance for progress.
AIM Skopje
BRANKA NANEVSKA