MACEDONIA IN A RUSH TO WORLD CASH-BOXES

AIM, Skopje, November 16, 1995

Although after the attempt on Macedonian President's life, doubts have appeared in local media that Macedonia has been subjected to reexamination by international factors which are allegedly checking again whether this former Yugoslav republic is capable of survival, it is getting on quite well internationally. On Wednesday, November 15, in Brussels, Macedonian Prime Minister Branko Crvenkovski signed a document on joining the NATO project "Partnership for Peace", so that this powerful Western military alliance became one of the potential formal, but also true guarantors of stability and territorial integrity of Macedonia.

Not long ago, as a forerunner to this undoubtedly decisive event even for the Balkans, Macedonia became both a member of the OSCE and of the European Council. Last month, the Council of European Ministers gave its approval for this rather small Balkan state (of about two million inhabitants) to join the PHARE program too. In order to become an equal twelfth partner in this European program which has already invested nearly four billion dollars in former socialist countries since its foundation in 1990, it is necessary to wait for a session of the European Parliament which will be held in the beginning of December, when Skopje expects this recommendation of European Ministers will be adopted. In other words, that it will officially gain access to this European cash-box.

In any case, Macedonia needs financial support from world cash-boxes, which has so far been arriving without major problems. Recently, experts of the World Bank have left Macedonia, so it is expected that this institution will extend the second half of the FESAC credit which is worth the total of 99 million dollars. Because, as Minister without portfolio in the Macedonian Government, Ljube Trpeski claims, Macedonia has still remained the "reform star country" among countries in transition. It was, however, comparatively easy for it to earn this epithet, since among republics of former Yugoslavia which are now independent states, it was the only one that had the privilege to sign the favourable STF (Systematic Transformation Facility) with the International Monetary Fund before it signed a stand-by arrangement in the beginning of 1995.

Macedonia has generally managed to fulfill even more than it was expected from it by the IMF. It succeeded in decreasing the 1994 inflation rate not just to the projected 80 per cent, but to 55 per cent. It stabilized the local national currency - the denar - which for the two past years has been worth, and still is, between 26 and 27 denars per a German mark. Foreign currency reserves were raised instead to the expected 180 million, to 250 million, so that to this day they have reached 262 million dollars.

After it had signed the stand-by arrangement with the IMF in the beginning of 1995, Macedonia took the obligation to lower the inflation rate to 17.8 per cent, but then succeeded to lower it to less than 4 per cent in the first nine months. By injections of money from the state budget into the foreign currency market, it also managed to preserve the value of the national currency, simultaneously preventing the denar from appreciation, that is, from reaching an unrealistically high value as it threatened to happen in view of the restrictive monetary policy.

All in all, Macedonian financiers managed to accomplish even more than keepers of European and world cash-boxes expected them to do, so they are now expecting to be given the opportunity in the next few years, until 1998 to be exact, to draw the necessary 450 million dollars of a new credit which will at first be earmarked for support of the payments balance of the country. Concerning the World Bank, that is, the expected 50 million dollars of the new FESAC credit, Macedonia believes that it has also met all the requirements.

The Economy Bank has started transformation, which was a condition for payment of the second half of the FESAC credit. Therefore, the national bank of macedonia now assesses that it controls about 40 per cent of the investments instead of the former 70 per cent. Five independent banks separated from it, and therefore, the National Bank of Macedonia has lost a serious competitor which could jeopardize its monetary policy. On the other hand, this bank transferred its bad deals (wrong investments) to the state Agency for Financial Rehabilitation of Banks which will be covered by state securities. These debts of insolvent clients in the next fifteen years will be recovered by the mentioned agency.

Despite all favourable agreements expected by the Macedonian bankers from international financial institutions, this former Yugoslav republic is still faced with the problem of old debts. Not taking 5.4 per cent of the joint unallocated former Yugoslav debt which is evaluated at somewhere between three and 4.2 billion dollars, Macedonia owes about 1.3 billion dollars to Western creditors, but another 950 million dollars it owes its citizens on account of their foreign-currency savings lost together with the former Yugoslavia should be added to this figure. All these commitments were taken by the Macedonian state in order to free the space for operation of the Macedonian banks.

Skopje managed to reschedule its debt to the Paris Club worth 250 million dollars. It will try to resolve its debt to the Zurich, that is the London Club (commercial Western banks gathered in this association) in a similar manner, but, as Trpeski says, Macedonia counts on the possibility that a part of these debts will be written off. But, whatever the case, this former Yugoslav republic will have to meet its obligations to foreign creditors amounting to 25 to 30 million dollars a year, which it will be capable of doing should financial injections be regularly arriving from abroad. In any case, as Trpeski claims, in the course of last year, Macedonia met its debt which was due and which amounted to 30 million dollars, and he is convinced, it will continue to do so.

VERA GEORGIEVSKA