No. E 183a

RESTRICTED

This report is restricted to use within the Bank.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

REPORT ON 'l'HE

ECONOMY A'ND CREDITWORTHINESS

(OF YUGn43LA VIA

October 1, 1951

Economic Department

Prepared by: Martin M. Rosen Samuel Lipkowitz Cicely Ryshpan

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

\

'~,

\1 .\

Currency Equivalents {Par Value}

1 dinar $ O. OZ

$1 50 dinars

1 J 000,000 din·a,r s ~ $ Z 0.,000

YUGOSLAVIA

Basic Statistics

Area 256,880 sq. kms.

Population 16.2,5 million (mid-1950)

Money Supply

Dec. 1948 Dec. 1949 Dec., 1950 Aprtl 1951 (in billion dinars) -.~---

Currency and sight deposits Less Government deposits

Effective money supply

Production, 1950

Foreign Trade

Electric pOi/fer Coal Blister copper l?efined lead Refine d zi,nc Savill tinbel'"

101 0 6 18.2 83.4

107.3 103.9 142.6 16~3 21.9 26~6

-91 0 0 82.0 116 0 0

(1939 = 100) 175 210 95

533 220 245

1949 1950 January-J1.lne 1951 1935-39

115.4 103.7

(in million dollm~s) Exports (f.o.b.) Imports· (c. i.f • )

302 .. 2 315c7

Foreign Trade, Geographic Distribution

1938 Exports--imports

East ern Euro pe vVestern Europe United states All other

Balance of Payments

Exports Imports

14~7% 7006 5.1 9.6

Trade Balance Net Invisib1es a/

Balance --

17 • 5}~ 64.5 6 it e

12.0

!5)38

100.3 99.0 flQ3

/181)7 7L20.0

192.3 158.6 291.4 235.8

19h8 Exports Im,orts

(% 0 f tot a 1) 51.1% 45~· 9/b 4104 44e9

20 6 304 4.9 5 .. 8

1948 1949 (in million dollars)

321.5 19109 378.0 332(9 -56 0 5 -14100 -22~0 18 .. 1 -78. 5 -132,9

69.1 127.9

1950 Exports Impo~ts

0 0 0 J.O 7L~,,5 66.7 13,,5 21.,7 12.0 110 6

1950

159.8 272.7

-112.9 115,,1 -97:8

a/ Excluding payments of debt service and profits and dividends on - private investment.

/18/51 0.587

BALANCE OF PAYMENTS (MILLIONS OF U.S.DOLLARS)

1938 RECEIPTS

PAYMENTS

1947

RECEIPTS

PAYMENTS

1948

RECEIPTS

PAYMENTS

1949

o 100 200

R EC E I P TS :::::::::::::::.:.::::::.:.::': ~:':'.:.:.:.).::.::'~':):J /J':.: :.~::

YUGOSLAVIA

300 400 500

NET INVISIBLES

PAYMENTS ~~~~~~~A.AA.~A~'A~~AA

1950

RECEIPTS

PAYMENTS

1951

RECEIPTS I PAYMENTS !

*Includes UNRRA, UNICEF, re~arations,and othp.r donations. ,--------------------------------~

DOLLAR BALANCE OF PAYMENTS (MILLIONS OF U.S.DOLLARS)

1948

RECEIPTS

PAYMENTS

1949 RECEIPTS

PAYMENTS

1950 RECEIPTS

PAYMENTS

80 100 I

I I

NET INVISIBLES

I.B.R.D. - Economic Dept.

9/IS/51 No.588

YUGOSLAVIA TOTAL EXTERNAL TRADE (MILLIONS OF U. S. DOLLARS)

60 ~~I--~I--~I--~~I--~I--~I~~I~~T--~T--~~T--~T--~1~60 MONTH L Y AVERAGES

I ~ _ ..j"'IMPORTS ....

~,'--~~l_/

40

20

j Q35 "'3 9 ~'4""'7 --'-'-'-4 9---1--, 5~1 ~ If"" V

I

/I "' IV 1950 195~

EXTERNAL TRADE BY COMMODITY GROUPS (MILLhJNS OF U. S. DOLLARS)

400~--~--------------------~

300 ORES, METALS a PRODS.

AGRICULTURAL PRODUCTS

200

100

0'35-'39 AV. '35-'39AV.

1/ III IV

I952

-40

- 20

I I I 0 II III IV

1953

J400 300

All OTHER CAPITAL GOODS

-1200

EXTERNAL TRADE BY PRINCIPAL AREAS (MILLIONS OF U.S. DOLLARS)

400!.===~==~------------~1

300 ~

WESTERN EUROPE r--~--------------------~400

IMPORTS

300

I

200 200

100 100

1938 '47 148 '49 '50 '5\ '52 1938 '47 '48 '49 '50 '5\ '52

PRODUCTION INDEXES ( 1939 = 100)

300~-~~~,~~-

200

100~~~------~

o L---1.----L---L."-L,~ __ L_1 '46 )48 '50 '52

r-OUA RTER L~".~J. co:~-·-'---..---'-----"---r---r--.----r---r----r-----' 3 00

, . I'· 200 :-- ..... . ..... ' ,

I -..-t:-lEAD-ZINC ORE

~------~~~------~----------+---------~IOO

" III IV 1952

/I "' IV 1953

I.B.R.D. - Economic Dept.

TABLE OF CONTENTS

SUMl'4ARY AND CONCLUSIONS

I INTRODUCTION

II - PREWAR YUGOSLAVIA

A. B.

Political Problems The Prewar Economy

III - EFFECTS OF THE WAR

• • e ••••••••••• . ............ .

A. Physical Destruction •••••••••••• B. Postwar Political Developments ••

IV - THE FIVE YEAR PLAN

A. Goals of the Plan .•••••••••••••• B. Progress Under the Plan •.••••••• C. Changes in the Plan ••••.•••••••• D. Excessive Investment •••••••••••• E. The Financial Effects ••••••••••• F. Balance of Payments Effects •••••

V THE PAYi,vIENTS CRIS1S

VI - CHANGES IN ECONOIvrrC POLICY

A. Investment Program Changes •••••• B. Changed Economic Institutions ." C. Effects of the Changes ••••••••••

VII - CREDITltIORTHINESS

A. Expnrt Increase Required ••••••••

1. Summary of Export Prospects • 2. Agricultural Exports , •••••••

B, Import Level ••.. , ••• , •• , ••••••• C. Balance of Payments Prospects •• D. Existing Debt Burden ••••••••••• E, Conclusion •••••• 0 ••••••••••••••

ANNEX A - External Debt of Yugoslavia ••••••••••••

Page

~ - ii

1

2

2 2

4

4 4

5

5 5 7 9

10 12

14

17

l7 20 22

23

23

24 24

25 26 26 27

2S

~ i -

SUMMARY AND CONCLUSIONS

Although Yugoslavia has substantial natural resources, including timber, non-ferroua metals, iron ore and coal, and oil and gas, the coun­try is still predominantly an agricultural economy with about 70% of the population earning their livelihood from agriculture,

At present the Yugoslav economy is in a very difficult pcsition~ The country has been running substantial bal,!nce of payments d~fiGit~ since the end of the 1-1ar which have had to be covered by fore~gn grants and loans and by drawing down its gold reserves ~~~ foreign exchange assets. The need for extraordinary foreign assistance to meet current ;.rnport r1eeds will probably continue into 1952 and this fact has been recognized by Fr~nce, the U.K., and the U.S. which have recently agreed on a program of financial assistance to meet these needs.

The long-run potentialities and prospects for the coulltry, hOvTever, are much more favorable than the present difficulties would indicate. The recent years have been transitional and abnormal and cannot, be considered a representative period. Yugoslavia has had to make up for wartime destruc­tion, to reorient its foreign trade from a prL~ary dependence on the USSR and Soviet satellites to other areas, to devot~ a substantial portion of the countryls resources to a military defense effort, and to reorganize its economic machinery to correct earlier err~rs. The drought of 1('50 com~ pounded the difficulties,

The attempt to carry out the very heavy investments required by the Five Year Plan has been a serious drain on the Yugoslav economic resources. In 1948, 27.8% of total available resources was devoted to investment and, with the additional expenditures requireq for other governraental activities including defense, not much more than half of total resources was &vailable for consumption. The investment program has adversely affected the bal~~c~ of payments, directly by requiring additional imports of equipment and metal products and.using up materials which otherwise could have been e~ported, and indirectly by adversely affecting incentives, particularly of the far­mer, to produce and to market products which could be exported.

Yugoslavia has now modified its original investment plan substan­tially. The overall magnitude of the program has been cut back and the composition of the program has been changed. More emphasis is placed on agriculture and light industry and less on heavy industry which had pre­viously accounted for a disproportionate share of total investment. The new program gives priority to the completion of projects already well ad­vanced but lacking some key items of equipment to get into production, and to investments which will result in an immediate and direct improvement in the balance of payments position.

- 11,-

Yugoslavia. is puttIng into erf'ect major mod'1fications in its framewcrk of eoonomic institutions which should rastore incentives to produce a greater output 'in a more efficient manner~ At the same time, modifications ara being made in agricUltural policy to provide direct incentives to the farmer.

~ah~evement of balanco of payments equilibrium could be accomplished by the mid-1950's, with a standard of living somewhat higher than the pre­sent, if the voll.lme of exports can be raised to about 88-98% of the 1935 ..... 39 average. In the ruture, as in the past, the bulk of Yugoslav exports will e~nslst of agricultural products, timber, and minerals. In view of the basie structural changes in the Yugoslav economy since 1939, especially the changed income distribution, the- volume of agricUltural exports undouhtedly will be

'below the prewar average. However, according to our estimates, exports of ,timber and met~l products can rise substantially above prewar levels, so that balance of payme~ts equilibrium CQuld be ac~mplished if agricultural exports were to b~.only about 5J-6~ of prew~ volume. '

With the 'completion of a limited amount of key investment projects having direct balance of payments effects and the succ~ssf~l carrying out of t~e 1nstitut~onal reforms to make the economy more efficient, '~ the mi4-l950~s Yugoslavia should be able to afford the equivalen~ of about $30 million annually in debt service charges. Since 85 to 90% of Yugosla­via's exports go to the non-dQllar area, hOl-leVer, the predominant amount of the debt service burden would have to be payable in European currencies rather than in dollars. .

.' Yugoslavia already has a heavy debt burden, a large amount of which is ~epayable on a relatively short-term basis. In fact debt service pay­mel s presently scheduled ror the next three years are clearly beyond the country's capacity_ Yugoslavia, however~ is now attempting to refupd its existillg debts on a long-term basis. The :;p30 million annual debt payment capacity would servioe a to~l debt of about $)80 million on a long-term basis (20-25 year maturity at an average interest cost of 4~), in 'addition to some payment on prewar bonded debt. It is on the basis of this analysis that the Bank mans-gement reached the eonclusiol1.J during its discussions l.rith the Yugoslav authorities in September 1950, that the ~ximum amount of add!. tional indebtedness that Yu ,oalavia should undertake in the next fe~ years should 'be limited to $200 million in addition to the then existing debt of $180 million.

A.t present Yugoslavia has total outstanding indebtedness, other than prewar bonded debt, of about $280 million. The proposed loan is therefore within the areditworthiness capacity of Yugoslavia, provided that it is acle to renegotiate existing short-term debts.

Economz and Creditworthine.ss -....-- ...... ------~ j

Q.f. YUgo slavia

I - INTRODUCTION -~...,.-.---

Yugoslavia has an area of 256,880 square kilometers (about five-sixths that of Italy) including 9,333 square kilometers acquired from Italy afte.r the second World War. .It has a long western frontier on the Adriatic Sea, and its neighbor~ - in addition to the four Cominform countries, Hungary, Rumania, Bulgaria, and Albania - are Austria on the north, Italy and Tr~este on the northwest, a"1d Greece on the south.

In mid-l950 Yugoslavia had a population of 16t million. This was roughly the same as in 1940 (in the same arsa), in spite of a deoline of over one million during the war. During the last few years, its population has been increasing at a rate of 1.6% a year. This exceeds even the very large increase of 1.5% a year in the 1930's, when Yugoslavia's population grew. faster than any other country in Europe. Its rapid population growth is one of Yugoslavia's most serious problems. Before the war, the expansion of employment opportuniti~s in industry did not keep pace with the increase in population, and there was, in consequence, a steady increase in unemployment which took the form of rural underemployment.

Dense forests cover over one-third of Yugoslavia's total area and it is one of E'tlrope t s principal timber producers. Its non-ferrous mineral resources, including copper, lead, ~inc, chrome, antimony, bauxite, and mercury art,3 among the largest in Europe.. Y~goslavia is a moderately large producer and exporter of iron ore, and its coal output, which increased by 10-15% as a result of th~ acquisition of Istria from Italy, exceeds domestic requir~ments although it is dependent upon imported coke. Known oil and gas deposita should meet its domestic requirements when fully exploited.

Despite the existence of these resources, Yugoslavia is still prim­arily an agricultural country with about 70% of the population dependent upon agric~lture for c livelihood. Before the war agricultural commodities ~ade up almost 6Wo of Yugoslavia's exports. A large part of the country, hovlever, is not 'self-sufficient in foodstuffs. Barely one-third of the land in the country is arable, and this is concentrated mainly in the Danube basin. It is thi~ ar~a which produces the bulk of Yugoslavia's agricultural surplus; it must also provide grain and meat to feed the cities and to make good the grain deficits of other parts of the country.

Transportation is mada difficult by the geographic terrain i.Thich, except in the Danube plain in the north and in a few scattered river valleys and upland plains, is exceedingly mountainous. A mountain chain close to the Adriatic lim~ts access to the sea, and rugged hills in the interior make road and-rail transport difficult.

I

GAUGE RAILWAYS BROAD

GAUGE RAILWAYS • NARROW .-1- BOUNDARIES

EPUBUC .-. - R BOUNDARIES - .. ~ INTERNATIONAL

YUGOSLAVIA t !O 40 ao ep

.IUi

eo 40 10 I Y 10

IU1.0.tTERS

HUN GAR Y

. r--

I

c

t N LBANIA

I

RUMANIA

- 2 -

Until the end of the first vIorld War, the terri tory now included in Yugoslavia formed part of four states - Serbia, Montenegro, and the Austro­Hungarian and Ottoman Empires. The unification of the nevi state was rendered difficult by profound national, religious, and cultural divisions among its inhabi tents. Before the Har it had a population of 12 million, of which about 2 million belonged to minority groups., primarily Germans, Hungarians, and Albanians. The rest of the population were Yugoslavs (South Slavs), but as a result of historic experiences were divided in religion and cultural outlook. The Serbs and Hontenegrins were members of the Orthodox Church, the Croats and Slovenes ,,Jere Roman Catholics, while a large fraction of the Bosnians vlere Mohammedans.. The Croats and Slovenes, who had been subj ect to Western influence for centuries, regarded their fellow 31avs as baci{Wsrd. The Serbs and £1ontenegrins, whose military efforts had been principally responsible for the creation of the n~'., state, regarded themselves as its natural leaders. These antagonisms were formidable obstacles to the solution of the country's serious economic and social problems.

At the beginning of World Har II, in spite of sorue encouraging dev­elopment in the intenrar years, Yugoslavia was still a primary producing country with one of the lowest national incomes in Europe. Only slightly more than 10% of ita workers were employed in mining, manufacturing, and handicrafts. Except in the Danube Valley, farming techniques i>lere primitive and yields low. Transport facilitie$ were poor; there were only 10,000 kms. of railroad, of which 7,400 kms. were standard gauge and only 6% double tracked. Rolling stock was insufficient and antiquated, most of the locomo­tives beipg of pre-19l4 German or austro-Hungarian origin. Highways were poor except in the former r.ustrian provinces where most of the 4, 000 tru.cks and 1,000 buses in the country operat0d.

Nanufact1,1.ring facilities had expanded some~That, especially in the late 1930's, but development was uneven and the country still exported a sUbstantial part of its primary prodqcts in unprocessed form, relying heavily on imported manufactures. There was a small iron and steel industry, but two-thj.rds of the iron o~~e mined in the country was E;3xported, Hhile the rolling mills at Zenica, expanded 1.-lith the assistance of Krupps jllst before the German invasion, depended to a considerable extent on imported semi­finished steel. The bulk of the non-ferrous metals produced were exported in crude or semi-processed form. 'rhe textile industry was the largest manu­facturing indu$try. In 1940, it employed 100,000 workers, and met about 80% of domestic requiremen~s for manufactured woven products. Besides these industries, there were a number of small plants p-~oducing heavy chem.icals, fertilizers, and c0m~nt.

- 3 -

In the late 1930's., exports} oonsisting almost exclusively of agri­cultural products, timber, and ores and minerals, averaged about $115 million while imports averaged about $104 million. A small surplus on invisibles brought the total surplus on ourrent transactions to about $20 million annually which covered profits on prIvate foreign investments in Yugoslavia and partial payment of contractual serv~ce on foreign-owned public debt.

- 4 -

Although Yugoslavia sustained relatively little damage during the rapid conquest by the Germans in April 1941, the effects of occupation, resistance} and liberation, combined Hith four years of over-exploitation and undermaintenance, caused nearly a complete breakdown of the economy~ The devastation of the transportation system, barely adequate for its tasks before the war, is an example of the effects of the war. When the country was liberated, two-thirds of the railway system was impassable, th~ee-qua~ters of the longer railroad bridges had been destroyed, half the rolling stock had disappeared, and all of the seven main repair shops had been severely damaged, two of them being completely unusable. All but a few hundred motor vehicles had disappeared and the highways were in very bad condition.

Expansion of Yugoslav productive capacity during the German occupation was limited to the drilling of a few oil wells and the enlargement of a few factories. These gains were far outt.[eighed by the War damage. A.ll mines showed the effects of over-exploitation and undermaintenance while a number of coal mines received direct military damage. The iron mine, responsible for 90% of Yugoslaviats output before the war, was put out of action, as was the entire iron and steel indu;3try. Six of the seven large power plants could not operate, and a large number of factori~s, stripped of raw materials, tools and essential machine parts, were bare shells. Farm buildings had been destroyed, farm tools had deteriorated or been seized by the Germans ~nd the number of draft animals as well as of other livestock had been reduced by 30 to 50%. Timber stands had been overcut to meet German war needs or burned to deny shelter to the Partisans, and timber cutting equipment and sawr:J.ills were tn bad condition.

Yugoslavia emerged from the \~ar as a communist state with its foreign policy based initially on close political and economic ties with the USSR and the so-called "people's democracies n of Eastern Europe. At the close of the war, political power in the country was held by the Partisans, the Communist-dominated :::-esistance forces. A provisional govern:aent was organ­ized by the National Front, a coalition dominated by the Communists anrl led by Marshal Tito, the commander of the Partisans. In the elections for a constituent assembly, held on November 11, 1945, all independent parties wi thdrew their candidates under pre 3sure from the I~ational Front, and there by it gained an overWhelming victory. It has continued in power since then, repeating its success in a se~ond election held on March 26, 1950. The assembly abolished the monarchy and adopted a new constitution which estab­lished a federal-type government composed of six republics ana two autonomous provinces. Although nominal power is vested in the assembly, power in fact rests with the cabinet, and almost all top positions are held by members of the Yugoslav r::nnrnunist party.

- 5 -

IV - THE FIVE YEAR PLAN

~s a communist state, modeled on the USSR, Yugoslavia immediately after the war assumed complete control of the economy and began the prepara­tion of a five year plan. As in the USSR, detailed planning was considered necessary for administrative reasons and it was thought to be essential to proclaim a ~rricie~tly promising goal which would make the immediate sacri­fices caused by the establishment of a commupist state appear worthwhile. Consequently the Flve Year Plan, cove~ing the years 1947-1951, became law on April 28, 1947.

A. Goals of the Plan

The Plan provided for raising national i~come to $5.1 billion (at 1946/47 prices) by 1951, or double tne 1939 level and for investment during the five years of $5.5 billion, or about 25-30% of anticipated national I 11'30 me during the period. Primary emphasis was placed on industry with 34% of investment allocated to mining, heavy industry and electric power. Only 8% was allocated to agriculture and forestry and 9% to light industry. Industrial production in 1951 was expected to be 225% of the 1939 level while the target for agricultural production was only 150%.

Within industry, greatest stress was laid upon eleetrificatiop, m~n~ng and prooessing of ores, and heavy manufacturing. In these fields an increase ot three to ten times the 1939 output was called for. In eO nsumers, goods, on the other hand, planned output in 1951 was to be only twice the 1939 output. The latter increase was, moreover, exaggerated, since statistics on output in 1939 excluded a larger fraction of total production - in small plants, arti­sans shops, and in homes - than did planned output in 1951.

B. Progress Under the Plan

Industrial production ~ncreased very rapidly from 1945 to 1948. In many cases, the extremely 10\.[ output in 1945 was directly due to war damage and dislocation, and reflected a substantial decline from prswar levels, espeeially in coal, iron and steal, metals and timber. Only in a few excep­tional cases such as crude oj,l was ·t,he 1945-46 output above prewar. By 1947, however, power, coal, iron and steel, cement and timber output exceeded pre­war levels, but output of non-ferrous metals, taken as a group, was below prewar.

In the soft goods field, great increases above prewar levels were claimed, particularly for textiles. However~ in view of generally smaller impqrts of fibers and yarns and the limited indigenous output of these fiber~, it 1..8 probable that the claimed increase was largely statistical rather than real. It was probably attribut3.bla to the inclusion in postwar. sta:cistics of the substantial handicraft output, which was largely excluded from prewar data.

- 6 -

By the end of 1948, the rehabilitation of damaged industries was near­ing completion and it was evident that further progress in output would be dependent on the speed with which additional plant capacity, largely dependent on imported machinery and equipment, came into operation. Although this factor alone would have tended to reduce the rate of growth in the years 1948-50, as compared with 1946-1+8, the growth in output was further retarded by foreign exchange shortages, necessitating reductions in imports of such raw materials as textile fibers and yarns, dyes, and coke. These reductions could be offset only to a limited extent by reductions in inventories, which were already relatively low.

The following table shows the extent to which increases in production between 1948 and 1950 fell below the corresponding increases between 1946 and 1948; in some fields, as in cotton fabrics, cement and nitrate of soda, pro­duction actually declined in the latter period.

Compara~ive Rate of Increa~ Production (1946-50)

% Change Between ~ Ch§;~Bet\.Jeen 12.42 and 1948 1948 and 1250

Energy Electricity .f 65 I- 11 Coal .j. 58 I- 18 Crude nil / 70 1207

Iron and Steel Iron Ore 1120 6 Pig Iron fl03 ;. 24 Raw Steel f 81 ;. 17

.~Ietals and Ninerals Blister Copper f 70 I- 9 Lead Concentrates f 37 f 26 Zinc Concentrates /103 I- 7

Building Material~ Cement fl15 2 Sal.J'n Timber f133 I- 9

:textiles I- 35~/ Cotton Yarn I- 9

Cotton .?abrics 1-162 - 14

Nitrate of Soda n.a. - 9

Caustic Soda n.e.. I I

e/ Estimated

- 7 -

In agriculture, the Five Year Plan contemplated only modest in­creases above prewar in output of the basic cereals with emphasis placed on the need to increase yields per unit of cultivation. The impleme~ta­tion of the program was deficient in that it failed to recognize that such actions as collectivization, compulsory deliveries and inadequate supplies of consumers goods tended to impair the private farmers' incentive to pl~"lt and harvest. By 1949 Yugoslav cereal production was lagging behind prewar, particularly in maize, the basis for livestock production. The decline was not the result of poor yields because of bad weather but be­cause area sown was substantially below prewar. Furthermore, vastly in­creased use of artificial fertilizers contemplated in the Five Year Plan did not occur. Incomplete data prevent any detailed comparison of output of agricultural products other than cereals. While increases in output of some products such as cotton were achieved, production of fruits and sugar declined from prewar levels.

c. Changes in the Plan

Because of the disappointing results, the need for modification of the Five Year Plan targets was evident by early 1949. In mid-1949, ",hen the first Bank mission visited Yugoslavia, important revisions of targets had already been made, involving in most cases reductions in targets for heavy industry, electric power, coal and oil. Increases in targets for timber and some metals and minerals reflected for the most part a more rapid rate of growth in output in 1947-48 than had been anticipated, and presumably some recognition of the need to increase the e~{port surpluses of timber and metals in order to pay for necessary imports. There have since been further revision~ in the targets and the following table indi­cates how industrial production i~ 1948-50 compared with original and re­vised targets for 1951 in major industrial areas, The substantial reduc­tions in the target$ for electr~c power, steel, ~ement, fertilizers, and cotton goods indicate that the o~iginal estimat~~ were excessive.

- 3 -

Produ~tion of' Selected Indl!~ria1 Co:nrnodi ties

1919, 1946, 1948L 19S0, Plalmed 1951

Comm-2.di ty Unit !939 1946 194~ 1950 1: 9 lj

5 Year Plan --Targets

E1eotric Power Mill. kwhs 1,100~/ 1,144E/ b/ 1,740-/

2,405~/ 4,350£/ Coalg/

2.169£ Th. tons 6,068 6,804 10,788 12,745 16,500

Crude Oil II II 1 21 36 111 450 Iron Ore II n 667 399 879 826 1,500 Pig Iron II 11 101 84 171 212 550 Crude Steel II II 235 202 367 428 760 Copper Ore II II 984 646 1,050 1,15t) Blister Copper II II 42 22 37 40 40 Lead-Zinc Ore " If 775 618 851 1,187 Refined Lead II " 10.7 33 49.2 57.1 65 :i.efined Zinc " If 4.9 n.a. '7.0 10.8 20 Antimony r\egulus ll " 1.5 n.9.. 1.5 1.3 1.3 Chrome Ore filuminum Cement 3a'."n Timber Fertilizers Cotton Yarn Cotton Fabrics

" H 45 n.a. 63 115 If II 1.8 n.a. 1.9 1.9 1'3 II n 663 586 1,263 1,241 2,200 Th. :~I3 1,213 952 2,746 2, ?90 1,650

" tons 73 n.a_; 80 67 350

" " 18.3 20(~/ 27 .5 29.9 47.4 Hill. H2 113 75~ 162 139 250

~/ As reported to the IB~, April 1951

~/ Production in territories of prewar Yugoslavia

c/ Including output from plants on the Isonzo River, acquired from Italy as a result of the Peace Treaty

g/ Prewar output from mines in prewar Yugoslavia; postwar covers also mines in Istria, acquired from Italy as a result of the Peace Treaty

§/ Estimate

1

Revis, TaE~!:'

2,955£/ 14,000

140 t~OO 262 46'3

1,~OO 37

1,364 77 13.1 1.:

100 2.

1,503 3,400

62 33 ..

151

- 9 -

In retrospect, it is clear that the original targets for 1951 1.,rare set too high in most basic industries. Not enough attention was paid to the difficulties in (1) procuring adequate quantities .)f specialized equip­ment from abroad, (2) financing such imports, (3) recruiting and training a labor force for its efficient operation, and (4) arranging for balanced expansion in supplies of materials necessary for full capacity operation. The political rupture with the Cominform countries undoubtedly accentuated the problem because deliveries which had been counted upon did not materialize. It is doubtful, however, whether this factor accounts for any signi~icant part of the failure to achieve the targets, since the trade deficit would, in any event, have been too large to permit the requisite volume of capital goods imports. Furthermore, -the difficulties of obtaining an adequate labor supply and balanced expansion in complementary fields would probably have retarded progress in any event.

The chief error in the Five Year Plan lay in the investment program, which was too large and improperly directed. It$ harmful effects on the economy were numerous. The direct effects were to divert labor and materials from consumers goods' industries, agriculture, and housing, and to reduce the supply of timber, cement, and similar commodities available for export and the labor supply available both foT" domestic a.nd export industries. Output in an essential activity like coal mining lagged behind schedule for lack of labor, and use had to be made of "voluntary labor brigades" whose efficiency left much to be desired. Indirect effects of the investment pro­gram were also of great significance, since the diversion of goods tended to impair incentives to produce, especially for farmers. There was little point in growing crops in excess of family requirements, when th~ sl~rplus could not be traded advantageously for building materials or other goods to improve living standards or the productivity of their farms.

The Bank mission to Yugoslavia in 1949 spent a considerable period of time working with the Yugoslavs to adjust national income and investrn.ent data, from the basis used in Yugoslavia, into a form 'W,~ich 'Would make a.n estimate of the investment burden possible. The following table shows th& way existing resources in 19L~8 were used for consumption, investment, and government eA~enditures:

- 10 -

~tilization of E~sting Resources in 1948

Billions of Percentage Dinars Q.~ill!£!l

Domestic production of goods and services 266 93.5%

Hat imports _4 _1.2-

Total A.vailable Resources 27~ 100. CYh

Consumption 1421/ 52.6% Investment 75- 27.8 Government expenditure --21 19 .. 6

Total Utilization of ~6sources 27Q 100.9% ---

1/ The investment estimate in this table has been computed t.o adjust different components calculated on various prices to a constant price basis and includes maintenance. It is, therefore, not strictly comparable to other investment data in this report.

Only slightly more than half of the total available resources was devoted to personal consumption. This is a lower figure than is known for any other country with a simiJ .. ar level of per capita income except in time of war. The investment program, together with other governmental eA~endi­tures, \.fas not only a very heavy strain on the standard of living but also caused acute balance of payments pressures.

In most economies, the results of an over-ambitious and unwise investment program can be discerned readily thraugh an analysis of monetary and budgetary data which would reveal the inflationary effects of the pro­gram. The Yugoslav economy, however, is one which can most usefully be analyzed in real rather than in monetary terms. The reason for this is that the price structure has been especially complex and unrealistic. Individual prices (including ustlally a very large turnover tax item) were fixed on an arbitrary basis, without direct relation to the rest of the price structure or even to real costlS of production. Hor was the structure of prices fixed on this basis - call1ed "uniform low prices" - applicable to all transactions. A considerable volume of transactions occurred at "linked prices," a set of low pr~ces for industrial goods for peasants who were willing to sell agri­cultural surpluses through normal distribution channels at simi~e.rly deter­mined low prices. And a free market existed for most products with prices from two to ten time,s a.s high as the official "uniform low prices. 11

-u-

In view of this complicated price system, it is very difficult to measure price effects of the inflationary economic policies followed. In fact the official cost of living index shews very little rise during 1947, 1948 and the first half of 1949 when over-investment was most acute. At the same time, there is no doubt, even in the minds of the Yugoslav offi­cials with whom this problem was discussed, that prices paid were actually rising.

A substantial increase in the money supply was occurring during the period IN'hen investment Wq.S increasing rapidly" The following table shows the money supply of Yugoslavia;

Money SupplY

Less Effective Sight Government Money

Currency Liabilities Total Deposits Supply ( billion dInars)

Dec. 31, 1946 20.5 19.6 40.1 .9 39.2

Dec. 31, 1947 29.5 47.7 77.2 9.2 68.0

Dec. 31, 1948 39.2 62.4 101.6 180 2 83.4

Dec. 31, 1949 45.1 62.2 107.3 16.3 91.0

Dec. 31, 1950 40.3 63.6 103.9 21 .. 9 82.0

Apr. ~O, 1951 38.2 104.4 142<116 26.6 116.0

During the entire period, the combined budget accounts for the Federal and republican governments showed a surplus. The increase in the money supply was caused by an expansion of credit by the central Bank. The money sUpply more than doubled from the end of 1946 to the end of 1949 as the result of heavy industrial demands on the Central Bank for Investm~nt financing. During this period, the growth in the money supply was not the underlying cause of economic difficulty for Yugoslavia but rather a reflection of the basis prob­lem - over investment.

In 1950 the effective money supply declined, largely as a result of the cut back in investment that began in that year. The ri3e in early 1951 was the result of the steps taken to rationalize the price structure (see Chap­ter VI for details of the new measures) and represents the expression in mone­tary terms of the real inflation that had previously occurred in suppresseq fo:rm.

- 12 -

F. ~alance of Payments Effects

The impact of the Five Year Plan on the balance of payments was par­ticularly acute. There was an immediate impact in the ~orm of increased imports. Naturally the emphasis placed by the Plan on industrialization meant a sizeable increase in imports of metal products and capital equipment as shown in the following table:

1935-39 average 1948 1949 1950

y. alue of Imports

$ 34.4 million 124.3 115.5 99.4

~atio o~ These Cate­gories to Total Imports

; .

33.2% 39.5 39.7 42.2

In the 1948-50 period the absolute value of these imports was more than triple the pret.Jar value, n 'ot taking into account deliveries of equip­ment by UNR:1.A and on reparations account, which are excluded from the foreign trade data used in the table. In large part, of course, this increase was attributable to price rises but the volume of such imports was prob~bly 10-20% above prewar. More important than the absolute increase, however, was the fact that imports of capital goods and metal products constituted a much larger percentage of total imports than pre\.rar. This meant that the import needs of the investment program were fulfilled, to the extent that exohange resources permitted, even at the expense of red~ced imports of raw materials and consumers goods.

There t.Jas an indireot effect on the balance of payments restllting froDi the efforts to carry out the Five Year Plan as well as the dilect effects of larger imports of machinery_ The fact that such a large proportion of total resources were going into investmE~nt - 27. ~ in 1948 according to our calcula­tion - meant reduoed availabili til3s for consumption. This problem was agg~a.­vated by the fact tha.t limited foreign exchange meant S!P9.ller imports of ra\Ol materials and consumers goods.

Im~rts of Raw Materials and Consumers Good!

1935-39 average 1948 1949 1950

~ 69.3 million 190.9 175.9 136.4

Ratio of Th~sa Cat.e­gories to. Total Imports

66.8% 60.5 160.3 57.8

- 13 -

Domestic ~roduction, particularly of consumers goods, was adversely affected. the affect on incentives to produce .... and, in the .case o:r the pe&sant, to market what he produced - of the inability to purcha.se the types and quanti­ties of consumers goods desired was, of course, very serious. The result was reduced exports. At thn same time, export availabilities of building materials in particular werd reduced because of the direct needs of the investment program. In 1949, for example, the total volume of exports was only aboqt two-thirds as gr~at as prewar, while agricultural exports were only 40f'0 0 f the prewar vo lume •

The efforts to carry out the Five Year Plan and the economic control measures put into operation thus had both direc1~ and indirect effects t-lhich separately and cumulatively caused balance of payments deficits.

- 14 -

v. THE PAYHENl'S CRISIS

Although Yugoslavia has been r~ing balance of payments deficits since the end of the war, in 1946 the deficit wae covered entir(~ -: y by IDJRRA aid and in 1947 largely by UNRltA and reparations deliverjpt:,1. (Basic balance of payments information showing the delici t to be fi!'..ar "1C, and mefu~S of covering it is given in the table on the following page.)

In 1948, however, the problem of financing the balance of payments deficit began to be more acute. The overall deficit in all currencies was only $78.5 million and two-thirds of this was met from reparations, resti­tutions, and other do~ations. The break in trade with the Cominform countries and the need tq proc~e supplies fro~ any sourc~ possible, pow­ever, me8~";:' that Yugoslavia WaS forced to PIJY in dollars for a larP.'~ amount of purchases made in the non~dolla.r area. In 194$, total dollar payments on commercial account were ~66.2 million, of which $47.1 ~~llion went to co~tries other than those in the dollar area. The need for these sub~t~­tial dollar payments resulted in a dollar deficit for the year of ~bout $55 million which was financed almost entirely by gold sale~ of ~52.3 mil­lion. Thus, by the end of 1948, Yugoslavia's reserves in gold and conVeT­tible foreign exqhange had been reduced to ;$35.5 million.

In the first part of 1949, the same trend~) continued. There was a large overall deficlt and, even more difficult to handle, a large dollar deficit so that remaining foreign exchange reserves dwindled away to a very low level. By the end of August 1949, Yugoslavia was at the virtual edge of financial disa~ter.

To meet the payments crisis which was facing it, Yugoslavia sought financial assistance from abroad. In the spring of 1949; Yugoslavia ac­tively began to seek a loan from the Bank and a B~ mission visited the country in August and September 1949. In September 1949, a drawing was made on the Fu,n'd for $3 million, followed by another drawing of $6 million in December 1949. Yugoslavia also received loans of $20 ndllion f~om the Export-Import Bank and of ~ 13 million from the U.K.

Although the loans from the U.S. and the U.K. were only partially drawn down in 1949, by the end of the year it was appar~nt that the ex~ tern,al assistance already made available would not be' suff:lcieI}t and that further aid would be required in 1950. The 1950 drought w:tth its heavy impact on the balance of payments aggravated what was alrelady a very acute problem. The deficit which had to be financed in 1950 was 8~ost $100 million. The prospective balance of payments position of Yugoslavia, more­over, clearly indicated that extrl;lordinary assistance would be needed for at least 1951 and 1952," even apart from any capit~ equi:::I:ent imports. It ·also bec~e clear that, if Yugoslavia were to achieve equi..licrium in the long run, this extrac:::cdinary assif~t.ance reqUired should be extended en a. grant baSis. Tllis was recognized b~r the United States Government wPich made a grant of $66 million for drought relief, France and Norway ~so made small fooo. grants -.7hile the U.K. Goverr..ment extended additional loan f~ds to help meet Yugchlavia's needs!

Y~oslavia - Balance of Pa~ments (In millions of U~S~ dollars

1946 1947 1948 1949 1950

Receipts Exports 57.0 172.7 321.5 191.9 159.8 Non-commercial Receipts 4.4 6.0 26.4 33.9 28.1 Private Donations 15.3 26.Q. ~ 14.0 14.6

Total Receipts 76.7 205.'3 365.6 219.8 202.5

Payments Imports 268.5 279.5 378.0 332.9 272.7 Non-commercial Expenditures 5,1 8.3 27.4 27.9 21.5 Gold Subscription to IBRD and U1F 0.6 7.9 Debt and Nationalization Service 5.3 18.9 4.0 6.1 Investment in Albania 27.6 19.8

l('\

~ 271.6 444.1 Total Payments 321.3 :}72.7 100.3

Deficit to be Financed 196.9 116.0 78.5 112.9 97.8

Method of Financing Gold (including restitutions) -0.9 -0.7 52.3 13.9 -1.8 Foreign Exchange assets -6.l} 19.3 -45.2 31.9 -9.6 Loans and Commercial and Bank Credits 3.8 15.0 16.5 87.8 payments Agreement Credi t's. -15.4 10.5 10.5 19.1 22 .. 9 UNRRA and UNI.CEF 220.0 63.0 !l,.6 5.9 3.2 Other Grants 5.3 Reparations and other Donations 'I. • ,-

(excluding restitutions in gold) 4.8 35.0 40.7 15.5 15.7 IMF Dra\'lings 9.0 Miscellaneous ~ _~.J 4.6 15.2 0.1

Total 206.2 130.0 82.5 127.0 123.5

Errors and Omissions -9.5 -14.0 -4.1 5.8 -25.5

- 16 -

In view of the repeated requests for aid from Yugoslavia since 1949 and the clear indications that she was still far from being able to finance minimum essential import needs, the Governments of the United states, United Kingdom and France decided to review Yugoslavia"s problem and if possible to work out a more orderly method of meeting its balance of payments difficulties. After a conference of representatives of these three countries in London in the spring of 1951, it was announced that their Governme~ts had agreed to provide aid to Yugo~lavia to assist it in meeting its current balance of payments deficit. The terms of the agree­ment have not been made public, but it was arillounced in August 1951 that about $50 million in. economic aid would be extended by the thre~ Govern­ments in. the six~mQ~th period ending December 31,1951. It is intended tpat Yugos1~via will receive ~~ther assistance in 1952.

Authorization for adqit:i.onal U.S. grants is provided in the Nutual Assistance Act now awaiting final action by the U.S. Congress. The Act do~s not allocate ~nounts of aid by individual countries so no spec~fic amount h~s been announced as the U.S. portion of the assistance program for Yugoslavia. The U.K. contribution can b~ made available as needed; in July 1951, the Government informed the Hous~ of Commons tnat it inten­deq to spend a maximum of $28 million for aid to Yugoslavi~ in the fiscal year 1951-52. The Frencp Government has asked legislative approval for the expenditure of $,~15. 7 million for economic and military aid to yugo-slavia in the period ending June 30, 1952.

- 17 -

VI. CHANGES IN ECONONIC POLICY

By mid-1949, the Yugoslav Government began to recognize that one of the results of an investment program of the magnitude it tvas attempting was the creation of large balance of payments deficits. Foreign exchange re­serves a~d swing margins on payments agreements had been practically ex­hausted, causing Yugoslavia to seek financial assistapce from the Western powers (particularly the U.S. and the U.K.) and from the Bank and Fund. 1'he aLm was to carry out the investment targets of the Five Year Plan, slightly modified from the original plans.

External assi~tance of the magnitude required to fina~ce the Pla~ c·ould not be obtained. This, together with the continuing deterioration of the Yugoslav economic position climaxed by the 1950 drought, has caused the Yugoslav Government to reappraise its investme~t plans and the ove~~l framework of economic controlso At the same time the very discussions on Yugoslav economic needs that have been occurring with the Bank and other sources of finwlcing resulted ~n the Yugoslavs themselves examining and critically considering policies and problems that were previously treated &s state economic secrets or as policies that were politically sacrosanct.

A.. Investment Program Cha.~ges

Since the key factor in Yugoslavia's postwar economic difficulties has been the over-large and improperly directed investment program, it is changes in trrls program which €U~e most essential for reestablishment of balance of payments eqQ11ibrium. Changes in the investment program, however, were politiual1y very difficult since ope of the causes for the break "lith the USSR and the Cominform countries had been Russian critici~m of the in­dustrial investment being undertaken ..

When the first Bank mission visited Yugoslavia in 1949, the size and the direction of the investment program constituted a major point in the discussions.. Original plans for 1949 called for a further sharp increase in the investment program, which in 1948 ab~;:)rbed 27.8% of avaitable re­sources. Some cuts, however, were already being made. The investment plan, which had called for total investment of 88 billion dinars, was reduced, during discussions with the Bank mission, to 80 billion dinars and even this figure was expected to be cut further. In fact, the continuation of diffi­culties already experienced with regard to imports of equipment reduced the actual 1949 investment to about 68 billion dinars including investment in trade and commerce, still 13% above 1948, but aLuost one-fourth below the original target; Some further reV1Slons were planned for 1950 but the scale and scope of this retrenchment was limited.

In addition to the difficulties arising from too large overall in­vestment, serious disproportions had arisen within the program. It was ob­viously easier to erect buildings, u~ing local labor and construction materials, than to produce specialized machinery and equipment, and foreign exchange resources were too low to finance the requisite amount of capital

- 13 -

goods imports needed to equip the structures. The result was a large number of completed bui1cings lacking the essential equipment to make an immediate contribution to increased living standards or to reducing the balance of payments deficit.

~vthen Nr. Black visited Belgrade in September 1950, he stressed the view that Yugoslavia was attempting to complete an over-large investment progrEUll in t.oo short a period of time. F-I.lrthermore, he indicated that the contemplated program placed too much emphasis on heavy industry and too little on light industry, or on agriculture and metals and minerals, in which export fields Yugoslavia had a good competitive position.

The investment program "'·;.12 discussed at length in Belgrade and for several months in 1tJashington. As a result of these discussions, Yugoslavia adopted a revised investment program, reducing its overall size and substa~­tially changing its composition. The following table shows the modified program and compares it with investment in recent years.

Energy

Composition of Yu.goslav Investment. I

Rea 1 i zed Investment Revised Plan

for

1947 1948 1949 19S0 1951-52 ~ (amounts in billion dinars)

Amount ~ 'AmolL.'1t ~ 'amount ~ 1 Amount ~ , A.tnount ~

4.3 12.9' 7.0 15.5' 12.4 20.7' 12.7 22.2' 23.7 21.4

Non-Ferrous Metal- 1.1 lurgy

3.3' 1.3 2.8! 2.2 3.7' 2.5 4.4 6.1 5.5

He avy Industry 6.7 19.9' 8.2 18.1' 9.8 16.3' 10.0 17.5' 14.6 13.2

Light Industry ~Dd 5.4 16.3' 9.4 20.5' 10.3 17.31 10.5 18.~ 26.9 ~4.3 Agrt.

T r a..'1sportation 8.5 25.5' 8.7 19.2' 12.6 21.0' 12.0 21.0 23.2 20.9

Other 7.3 22.1' 10.8 23.9' 12.6 21.01 9.4 16.5' 16.4 14.7

Total J2/ 33.3 100.0' 45.4 100.0' 59.9 100.0' 57.1 100.0' 110.9 100.0

~ Al though the program has been termed a 1951-52 program, Yugoslavia expects effective disbursement of the proposed program to require an average of three rather than t1-JO years

121 Excluding investment in trade and COII1"1lerce and investments financed by extra-budgetary sources

- 19 -

The composition of the new investment progr~~ was based on g~V1ng priori ty to in7estments which l..,iould yield a substantial output of finished goods in relation to the amount of additional investment needed. This meant that attention should first be given to the completion of projects already well advanced but lacking some key items of equipment to get into production. Equal emphasis VIas placed on investments "'hich would result in an immediate and direct improvemr-.Hlt in the balance of payments position. A third criterion of selection was investment in projects which would produce the kinds of goods particularly desired by farm3rs, with a view to increas­ing incentive s to produce saleable crop surpluse 5 for e:h.-port. In addition necessary basic investment was provided in the fuel, energy and transport fields to permit the rest of the program to be carried out.

Changes in the direction of the ne"T prog::-am are perhaps even more significant than the reduction in its total size. The proportion of in­vestment devoted to heavy industry, particularly steel &~d metal processing, has been cut sharply while investffi~nt in energy (electricity, coal and oil) is being kept at 1949-50 rates. These are subst~~tially above 1947-48 rates, when neglect of these activities resulted in pol,.Jer and fuel shortages. Investment in metal mining and refining has been increased both in absolute and relative terms. Light industry and agriculture are given a more promi­nent role in the investment program than at any time in the post-war period, especially agriculture and fishing, textiles, pulp and paper, ~~d chemicals.

This reorientation of the investment prograrn should materially assist in restoring balance to the economy. Additional construction materials will be freed for export and agricultural uses c:..nd increased supplies of consum­ers goods should be available, which in turn should increase thf~ farmers r incentive to produce saleable crop surpluses, thus raising both domestic living standards a.l1d ag-.cicul tural exports.

N:uch of the earlier investment was ~11 structures, 1,olhich lacked the complementary machinery ~l1d equipment and so was temporarily non-productive. Because the revised investment program gives priority to projects "Thi<~h are already well adva~ced, the effect of this new investment on production of finished products, both for internal consumption or export, shou~d be sig­nificantly greater than the results of investment in previous years.

The revised invest.ment rrogram is predicated on the use of foreign credits to finance ptrrchases of eqUipment and machinery in many sectors of t~e economy. The production of basic industries like electric power, coal, and salt is to be increased to keep pace with the needs of the conslwing industries. Processing industries like cement, plywood, fish processing, and zinc refining, which utilize mainly dome~tically produced materials, are to be expanded to increase the export earnings from sale of processed pro­ducts. Expansion of processing capacity for paper and pulp, glass, ceramics, chemicals, and .some metal products 1>lill provide larger supplies for internal consumption, thereby effecting import savings. Some investments are intended to modernize and re-equip existing plants in order to reduce labor, fuel, and material requirements as well as expanding output. In addition, some imports are provided for a modest degree of agricultural mech~ization.

= 20 ==

B. Changed Economic Institutions

Very soon after the bre&.k with the Cominform made it politically feasible for the Government to question the soundness of its earlier eco­nomic polcies, which followed very closely the model of the Soviet Union, the Yugoslav Government began to re-examine its framework of economic insti­tutions. Since the beginning of 1950, a series of modifications has been introduced, aimed at increasing basic incentives in the economy fu~ improv­ing efficiency through the relaxation and decentralization of controls. The process is now to be carried much further in a series of laws on planning, wages, and prices recently introduced into th~ Parliament.

In agriculture, two changes have been made which, although not of major significance in principle are of considerable importance in fact. One is a modification of practice rather than a change of formal policy. This change is the relaxation, which "oegan as early as 1950, of government pres­sure upon the farmers to join cooper~tives, although the Government has con­tinued to advocate a cooperative form of organization for agriculture. This year the absence of such pressure resulted in the withdrawal from cooperatives of many farmers whose contracts were expiring. Although gover~~ent spokesmen have expressed dis3atisfaction with this development and have announced their intention to favor cooperatives as compared with individual farms, there have been no reports of coercion of farmers no-c. to withdraw, or of renewed pres­sure on them to enter cooperatives.

This change in practice was followed in 1951 by a legal change of much L~portance - the drastic limitation of the system of compulsory deli­veries. In 1951, the co~~odities which farmers were obliged to deliver to the Gov3:!:"runent at "uniform low prices" were red:J.ced to three: grains, ani­mal fats, and 1.-1001. In previous years, compulsory deliveries of dairy pro­ducts, ::leat, potatoes, and other vegetables had also been required.

Rationing at the consumer level has been limited to a very small nQm­ber of commodities - primarily bread, lard, soap, and woolen products. Offi­ci~l prices of some consumers goods such as salt, cigarettes and tobacco, a~Q matches have been substantially increased in recent months while most other consl~ers goods are now sold at free market prices. There is, however, a complex system of subsidies and multiple pricing, with urban (but not rural) consumers receiving coupons, varying in number according to the essential nature of their occupation, entitling them to an 80% rebate on the prices of items now sold at free market prices but formerly rationed. Rural consumers who deliver agricultural products to the Government at "uniform low prices" also receive coupons entitling them to a rebate of 65% in the prices of in­dustrial goods. This system of "linked prices," which has been in effect for some time, has not, hO'l,leVer, proved to be very succe ssful.

The proposed laws on pla.nning, wages and prices \01il1 alter very mark­edly the formal character of the basic economic institutions of Yugoslavia. The ~ederal Government will no longer establish detailed and inflexible pro­duction and investment schedules for individual industries and enterprises. Its role will be limited to establishing the general linea of economic de-

- 21 -

velopment. On the basis or this general plan f the average level of produc­tion and investment in each industrial sector and the magnitude of its so called tlpermanent wage fund" - i.e. its total basic wage payments, will be progranmed. Individual enterprises are to be allowed to exceed the average levels laid down, provided that general balance within the economy is main­tained.

As a stimulus to efficiency, workers will receive a considerable part of their pay in the form of "variable wages," which will vary with the pro­fits of the enterprise in which they are employed. Moreover, if an enter­prise does not earn enough to pay even the basic wages - called the "perma­nent Hages fund" - employees will have their wages reduced, although a floor is set at 80% of the basic wage. The establishment of a link between wages and earnings of an enterprise is expected to restore the incentive to efficient production which has previously been lacking. The profits of an enterprise will, in addition, have to be large enoq.gh to cover all or most of the costs of new investment. The Government budget, which has hitherto been responsible for financing the bulk of the investment requirements of the economy, will now finance investment of basic industries only.

In order to make possible balanced production thro~ghout the economy, the Gover~~ent is retaining the right to allocate raw materials and to set employment ceilings for individual industries but not for individual enter­prises. In addition it can regulate very closely the activities of indi­vidual enterprises which do not cover costs. Through its right to check on the success of individual enterprises and industries in meeting overall tar­gets, moreover, the Government retains a considerable amount of control over the economic situation, while permitting individual enterprises a large de­gree of operating freedom.

Other important cha.."lges being vlorked out involve a major alteration in the entire price-wage structure of the country. The aim of these cha~ges is to do away completely with price fixing, subsidies, and the multiple price system so that prices anc costs, determined by market factors, can assume their traditional role of assisting in controlling the economy_ At present actual cash wage payments by an enterprise constitute, on average, only 40% of the real \Oiage received by a worker. The remainder is paid in the form of government subsidies" such as purchase rebate coupons previously described, and family allowances paid out of the government budget. The new approach will require total wage payments to be paid in cash and to be borne by the enterprise in ,.,hich the worker is employed.

Changes in the system of wage paymants will, of course, involve changes in costs and prices throughout the entire economy_ Prices of consumers goods will be fixed by market factors and prices of equipment and semi-processed products sold by one enterprise to another will be increased to take account of costs and, as far as possible, of market prices of substitute items. vlhen the new system is put into effect, the ~esult will undoubtedly be a consi­derable increase in the average price level of the cO~ltry. At that time Yugoslavia will have to examine carefully the relationship of its internal

- 22 -

prices to world prices to make sure that the exchange rate, as one of the cost-price elements in the economy, has been properly selected.

C. m.ffec~s of the Che.nges

The changes in economic policy and the reorientation of the invest­ffie~t program should have beneficial effects on the balance of payments over the next few years. Imports of capital goods and metal products can be ex­pected to decline slowly for the next two or three years as the plants now awEd ting equipnent are put into operation, and more rapidly thereafter e.s the fruits of such equipment become available in increased output of goods for the home market.

Past and planned investments in non-ferrous metal ~n1ng and refining will result in substa~tia1 increases in the real volume of ex,ort of these commodities. Moderate increases in timber exports are feasible, with re­latively little new net investment. Part of the increased output of coal, cement, chemicals and other products contemplated under the revised progr~ are intended for export. The main hope for an expanded volume of exports of vegetable and animal products lies in the incentive Ve.lU€1 of increased supplies of building materials and consumer goods and in th€~ changing a.tti·~ tude of the Government with respect to compulsory deliveries at fixed prices. These factors should provi::ie an incf~ntive for greater agricultural produc­tion and marketings.

- 23 -

VII - CREDIT.70RTHlNESS

Yugoslavia is at present in a ve~J difficult economic position. The country has acute balance of payments problems with current exports and no~ .. ~rade earnings insufficient to pay for even essential imports of raw materials and consumers goods, much less for any imports of capital equipment. ~ore­O"i.er a forecast of the future" based solely on actual developments in produc­tion and trade since 1948, would be far from encouraginm.

The period since 1948, hmvever, has been both transitional and abnor­mal. Besides continuing to make up for the very extensive wartL~e devasta­tion and destruction, Yugoslavia has had to reorient its foreign trade from a primary dependence on USSR and Soviet satellite markets and sources of sup­ply to other areas. In addition Yugoslavia has undertaken a SUbstantial re­organiza t.ion of the machinery of econocq.c management in an effort to correct earlier errors of its own making ''fhich compounded its economic difficulties. Its military defense program has been increased and is a heavy drain on the country's resoltrces. hdded to all of these difficulties came the disastrous c-rought of 1950.

For all of these reasons, the results of the past fe"., years are not truly indicative of the long-tE":rm ecoilomic proe~ects of Yugoslavia. Estimates of Yugoslavia t s balance of payments prospects for 'Lhe mid-19.50' s inc-licate that, by t.hat time, the national econo:rIrJ and foreign trade of Yugoslavia t.-.,-ill have begun to reflect the effects of the sounder aspects of the generally over-large invl='stment progl"am begun in 1947. This will be true particularly be­cause the program as revised in the p~st year, and especially those invest­nents to be financed by the proposed Eank loan, er..phasize the completion of projects begun earlier and the postponer:rent or abandonment of a number of large scale and wholly new projects. This change in emphasis should ease somewhat the strain on the Yugoslav labor force engendered by an excessive construction program, free substantial ouant.ities of cement, timber and other materials for e)~ort, anti result in some curtailment of imports of steel, electrical apparatus, etc. Furthermore, such a moderation of the pace of ne'w in't'estment should :make feasible the introduct.ion of more efficient methods of construction and production, "'.vith further benefits to the econcmty'. The proposed reforms in the Pf"ice and wage stru,cture should contribute to this process. A. Export Increase Required

The conclusion emerging from stUdies of Yugoslavia's export potenti-ali ties and import requirements is that balance of payments equilibriwll can be achieved, ~.'rith a standard of living at a level somewhat higher than the present, if the volume of exports can be increased to approximately the average level for 1935-39. In fact exports even son:ewhat below the 1935'-39 average should be sufficient to cover necessary imports and debt service payments of about ~:JO million an.l1ually. Pl"'e':Iar, at a price level substantially below present prices, Yugoslavia had a surplus on trade and invisibles ac­count (other than debt service and investn:ent incolT.e) arrlounting to the equi­valent of approxima tely :;~20 million. However, exports in 19h9 (19.50 exports \;ere especially 1m': because of the drought) "':ere only 687~ of the prewar level so that a recovery to approximately prey:ar levels will require very substan­tial increases.

- 24-

1. Summary of Export Prosnects

Any estimate of export probabilities for a period several years in \the future is of course uncertain. The many changes taking place in the Yugoslav economy add to these uncertainties. Nevertheless, ~rlth all these factors taken into account, the following table is a reasonable estimate of the volume of Yugoslavia's exports in the mid-1950's:

ExPort Volume

Vegetable & Animal Products Timber Metals & Metal Products Others

Total

1935-39 100 100 100 100 100

1949 40

183 74 46 68

lviid-19'50 t s 53-62

197-211 120

61-70 88-98

Yugoslav exports, in the next few years as in the past, will consist very largely of metals and minerals, timber and wood products, and vegetable and animal products. we estimate that these three categories of products will have to provide $215-235 million, or 86% of the total exports' of ~p250-275 million needed by the mid-1950's for balance of payments equilibrium.

On the basis of an intensive investigation into the minerals potential of Yugoslavia, the Ba~~ believes that the forecast of 62% increase in exports over the 1949 volu~e is quite feasible. These exports have already increased by 19% in the 1950 year alone. New investments to be financed in part by Export-Import Bank loans which have already been extended and in part by the present loan proposal, in particular the zinc electrolysis plant, should make possible achievement of the export target.

In the case of timber and its products, the 8-15% increase forecast also appears attainable, given a moderate degree of investment in new equip­ment for timber cutting and processing. In fact, earlier proposals by Yugo­slavia contemplated a very substantially higher volume of exports for a limited period of years, although this would have involved considerable over­cutting and could have not been maintained for long.

2. Agricultural :exports

Agricultural exports are the key to the solution of the problem of Yugoslavia's bala~ce of payments. Unfortunately, it is in this category of products that the greatest degree of uncertainty as to future prospects exists. Basic structural changes in the economy since 1939, and especially the changed income distribution have increased domestic consumption of food­stuffs 'l"lhich vTere formerly exported. For example, meat consumption on farms has increased substantially from the low prevIaI' level. This increase in domestic food consumption will undoubtedly continue and thus reduce the vol­ume of agricultural exports considerably below the prewar average. However, it would be possible to attain balance of payments equilibrium if such ex­ports recovered to only 53-62% of the prewar level.

Exports of maize, wheat, ~~d meat, which are the major agricultural export items, have never been more than marginal amounts of total output .• If an increase of only 5% in total production of these items could be devoted entirely to exports, the result would be a 50-100% increase in exports.

- 25 -

Consequently meeting the required target for agricultural exports is depen­dent even more on the iray the economic system operates to make available a relatively small proportion of total agricultural production for export tLan on the level of agricultural production. There must be economic in­centives for the individual peasant, whether he is a private landholder or a n:emcer of a cooperative, to produce and especially to market what he pro­(~uces •

Extensive investment in agriculture would serve to increase hectarage, yields, and total output but, initially at least, it will be of much less importance for exports than changes in the economic structure to provide the needed incentives for the farmer. Fortunately the Yugoslav Government has re~lized the importance of this factor and has recognized that an agricul­tural policy based on forced deliveries from the farmer has been a failure. Undoubtedl:'l it will take time for the ne1~1 system of economic incentives to become fully effective but Yugoslavia should be able to expand agricultural exports to the required level.

B. Import Level

Apart froB inlports of metal products and capital Goods, ~hich are dependent almost entirely on the level of investn:ent and the defense effort, other imports by Yugoslavia in the mid-1950 1s are estimated at about ~180-190 million, or slightly above the 1949 level. There ~ould, h~rever, be a considerable shift in the composition of commodities.- Imports of tex­tiles, chemical and rubber products, and hides and skins ~ould be larger while fuel imports 'i'vould be s~aller. ~educed fuel imports would result from substantia.lly ir~creased petrole1..llr. output and the expected increase in the prot;uction of semi-coke from lignite to s1:bstitute for part of the coke imports.

Ant.icipated construction of new capacity in textiles, chemicals, paper and pulp, and other fields will make possible increased consumption ,,-;i th sr.1aller imports in two ways. To the extent that production is from indigenous materials, it completely replaces importse A number of the projects in the proposed Bank loan will have this direct effect.· In addi­tion, in the textile field in particular, the cost of imports will be re­duced since raw materials such as cotton or wool -;'Ji11 be imported rather tha!1 fabricated products such as cotton and v'1oolen yarn or even finished fabrics_

In the mid-1950 I s, imports of metal products and capital goods are I'Bstir:ated at ~~50-60 million or less than hali' the 1949 level. In 1949, hovJever, imports of these cOl~unodities were especially high. This was due partly to large im"?orts for special defense purposes. InpOl'ts of capital ec~uipment Yiere also relatively high because of deliveries on contracts "?laced earlier in connection with the Five Year Plan IS investrr.ent program and because Yugoslavia's capacity to proc~uce machinery, equipment and fabri­cated metal products was very much lo~er than is eA~ected to be the case by the mid-1950's. Since the pace of the investrr:ent program has been deceler­ated and sorre new plants will have been brought into operation in the rr.ean­time, imports of equipment and metal products can be reduced sharply. The estimated decline in such imports is believed to allow for an adequate amount of replacement parts and essential metal product imports.'

- 26-

c. Balance of Payments Prospects

On the basis of the preceding anr.lysis or export prospeots and import needs, the Yugoslav balance of p~ents position in the mid-1950's should be approximately the following:

Balance of PaYments Prospects

1949 Mid-1950's (in millions of US dollar~ at" 1949 prices)

Exports 192 .. 5 250-275 Net In.visibles 6 .. 0 10

Total Receipts 198.5 260-285

Capital Goods & Metal Imports 113~4 50-60 Other Imports l7~,:.Q 180-190

Total Imports 291.4 230-250 Debt Service _it.J2 JO Total Payments 295.4 260-280

Balance -96.9 o to -f. 5

Yugoslavia can, therefore, be considered ereditworth7 for a foreign debt involving a service burden of about $)0 million annually in all curren­cies. For this creditworthiness appraisal to be reallstic, however, the pre­dominant amount of the debt service burden would have to be payable in Euro'­pean currencies rather than in do.l.lars. About 85-90',l of Yugoslav exports in 1949 and 1950 "Ient to the non-dollar area and its natural source of imports of raw materials, eqUipment, and finished goods is outside the dollar area. Its major export ~tams - timber, grains, meat, and metals • are goods badly needed by the rest of Europe and therefore readily saleable to Europe. Except in the case of metals, they are not saleable in the dollar area exoept in limited quantities. In fact the possibilities for the sale of Yugoslav goods in the dollar ~arket in the mid-1950's are probably limited to about $)0-40 million, consisting primarily of non-ferrous metals, hops, tobacoo, canned fish, hides and furs, medicinal herbs, and opium.

D. Existing Debt Bu!den

Yugoslavia at present has a large external debt, on which detailed in­formation is given in Appendix A. Apart from the pre-war debt, the total amount of which is difficult 'to calculate because of exchauge rate-complications, Yugo~lavia had incurred an external debt by September 1950 of about $180 million. At that time, the Bank management advised the Yugoslav authorities of its ba­lief that it would not be prudent for Yugoslavia to borroY~1 in the nextfev years, more than an additional :~200 million, thus limiting its total debt to not more than :~J80 million. By June 30, 1951, the debt had risen to the equi­valent of about ~280 m111ion~

- Z7 - .

For the most part, these debts are short-term or medi~term and the present debt service schedule calls for average payments of about C47 rullion annually during the 19S2-55 period. Payments of this magnitude are clear~ beyond the capacity of Yugoslavia to service, particularly during the period in question. A substantial amount of the debt is owed to the U.S •. , .. U.1\ •. , . and France, the three countries which have agreed on a program of economic assistance to Yugoslavia, and the Bank staff, in informal discussions with representatives of the three countries, have made clear the impor~ance they attach to an appropriate solution of this problem. The Bank has discussed the w~tter repeatedly ~~th the Yugoslav Government, which is presently en­gaged in attempting to renegotiate the terms of its existing debts with its principal creditors.

The present government of Yugoslavia has recognized its liability for the prewar debts of predeoessor governments and, in some cases, of former states. The prewar debt is predominantly a French franc and U. S. dollar debt. In April 1951, Yugoslavia reached an agreement with the Frerich Gover~ . ment which prov-ided for token payment for an interim period on the prewar French debt. ' The Yugoslav Government has had some discussions with the U.~ •. Council of Foreign Bondholders but has deferred further negotiation until the economic situation improves sufficiently to permit service to be resumed on a reasonable basis.

E. Conclusion

With the successful completion of appropriate investment projects in priority fields and vdth effective implementation of basic changes i~ the organization of economic controls presently being put into effect, by the mid-l950 's Yugoslavia should be able to meet debt service payments of about $30 million annually in all currencies. The probable pattern of Yugoslavia's foreign trade, horrever, requires that the bulk of the payments should be in European currencies rather than in dollars. The $)0 million annual debt payment capacity would service a total debt of about ~)80 million on a lQng term basis (20-25 year maturity at an average interest cost ot 4i%), in audi tion to sozr.e payment on pre-war bonded debt. ,! This would mean that Yugoslavia could. afford a debt burden about ~:j200 million larger than the ~:'.l80 million outstanding in September 1950,. w:hen the Bank management advised the Yugoslav authorities that the amount of additional indebtedness that Yugoslavia should undertake in the next three or four years should be limited •.

At present Yugoslavia has total outstanding indebtedness ,'. other than pre-war bonded debt, of about $280 million.. The proposed loan is therefore 'within the creditworthiness capacity of Yugoslavia, provided that it is able to renegotiate existing short~term debts.

EZTERlTAL DEBT OF YUGOSL.AVIA

I. Present outstanding debt

Yugoslavia's out standing external debt may be divided, for conveni~:.nce, int 0 the pre-~'lorld '!Jar I I debt and 1)0 st-',vorld \'lar I I debt s (i. e. the Ha tio~alj. zed Property De"9t and the Ne\'! Debt). -

1) Pre-i"Jorld "[ar II Debt - This category of debt consists mainly of privately-held obligations takE'n over from the constituent parts of Yugoslavia 01'1

its establishment after vlorld ~1Tar I or issued by the countr;)7 in the 1920's. The debt involved, by type of currency, is listed below. (For details see Table A-la).

Total Dollar Bonds .., q>

Total French Franc Debt fr Total Sterling Debt T

:c

Total Svll s s Franc 30nQs Si,v fr ']\) tal Other Debt

Total pre-..\Vorld Vial' II Debt

Amount OutstandinG; - June 10. 1951 In currency of' 'uayment Gross ! Het 1/

( in thousands) 42,328 $ 29,640

3,203,282 fr 3,203,282 17 ±, 17

9,536 S1r! fr 9,536

E..~pre s sed in U. S. dollars

29,640 ~/

48 2,197

10 211'5

11

De~Jrecia tion of the French franc has re suI ted in 3. severe decline in the current clollar value of securi ties denominated in that currency from aoout $582 mill ion at the time the money vIaS inve sted to $9.2 million at the pre sent excL,ange rate of 350 fr~nc s to one dollar.

On A:?ril 14, 1951 a financial agreement 1-TaS concluded bet'\:Jee~ the Yugoslav and. French Governments which provides for a provisional three-year arre.ngement under 1:1hich fl. pEl,rt of the proceeds of Yugoslav exports to France, ranging from 8;; in 1951/52 to 12% in 1953/54, i,~ill be used for payments on ?~el1cll claims aGainst Yugoslavia. Of the tot.al payments, 32~ ':.ri11 oe paid to former o~mers of nationalized nroperties, 64~ will be used for service on French held debts and 4;~ 'will accru~ to the French Treasury. Based 011 projected eXIJorts, pa~r­ments to the French bondholders during 1952, 1953 and 19.54 \-loulo. be equivalent to $562,000, $934,000 and $1,120,000 respectively.

IlJegotia tions for a settlement on the dollar bonds 1:1ere started in MRrch 1950 betueen the Yugoslav GoverniJent and the Presid.ent of the Foreign 30ndholders Protective Council, Inc. These discussions 1:1ere ad~ourned, but ~he Council expects to see them resumed later.

Note: The follo~'Ting exchange rates '"ere used: :hI = ~2.80; fr 1 ='$0.3267; fr 1 :;: $0.0663; $1 = ir 350; Sl'l fr 1 = $0.23048; Kc 1 :: $0.02; Be1ga 1 :;: $0.10.

1/ Het of bonds owned by the State Inve stment :SaTL~. gj The dollar equivalent at the time of issue of the securities 1101.ud. be

$581,570,000 . .A.t the l')resent French franc exchange rate, the dollar eCl'tJ.ivalent vlould be $9,152,234. JJ :Jollar e0.1.uivalent of the total d.ebt, "lith French franc debt at the value at ti:ne of issue, \'Iould be $624,660,000. If the French franc debt ~ras taken at the c'U.rrent exchange rate, total debt \·Jould be $52,242,234.

. .. / ...

- 29 -

2) Post-World War II Debts - The debts in this category fall into two major heaclings, (a) the obligations arising from the nationalization of foreign ~roperties in Yugoslavia called the Nationalized Property Debt and (b) the various loans made by other countries to Yugoslavia cl.--ssified as }~Te"" Debts.

(a) The Nationalized Propertx Debt - A substantial debt results from the nat ionaliza tion of forel-gn inve st'f,H3n't sin' Yugo slavia. The claims out standing based on ?resent agreements total about $50 million. The settlement agreements do not provide for interest payments. (For additional details see Table A-I).

~ Arising Out of Nationalization

Belgium Denmark France Israel Horway S'\,'ieden 8't.1i tzer1and United Kingdom

Total ITationalized Pro]?erty Debt

Amount Outstanding - June 30. 1951 In currency E~}ressed in of paYment in U.S. Dollars

B fr 358,000 QQOIS 7,160 DKr 1,000 145 fr 5,009,200 14,312

16,200 324 NKr 215 30 SKr 1),100 2,531

Sw fr 70,835 16,326 b 3,291 9,215

50,043

... / ...

-' 30 -

2) (b) The l'fevr Debt - Other obligat:1.ons incurred since the close of ~vorld \lIar II consist of the follQvring. (For addi tional details see Table A-I) .

DOLLAR DEBT B.I. S. EA~ort-Import Balik

I.E .. R.D.

- outstanding undisbursed

Totnl Dollar Debt • . . . . . . of which undisbursed (E..>::im Banl-c)

STE..."tLIIJG DEBT f.,8,OOO,OOO loan

I,J,ooo,OOO loan

1;,4,000,000 loan

h2,OOO,000 loan

Revolving credit Total Sterling Loans ..••

of which undisbursed LOA1:rS FROT.'I OTHER GOVERl\!NEl'JTS

Austria Egy}Jt - cotton loan France- military loan Norway- food loan

- outstanding undisbursed

- outstanding undisbursed

- outstanding undisbursed

- outstanding undisbursed

Total loans from Other Governments OTHER DEBTS

Belgian bank credit

Belgian exporters Germany - medium-term

short-term Netherlands ship loan S'\Vi s s bank loan

Total Other Debts

credit credit

of which undisbursed TOTAL 1;j]]1v DEBT ... . . .

of ",hich undisbursed

- outstanding undisbursed

. " . .

B 13 13

.Amount 011tstandinp;; - June 10, 1951 Incurrency· 'Expressed in of -payment u. s. do!_lars

. (in thousancls)

$ $

3,500 48,065 6,935

496 58 1 996

6,93.5

6,0.51 1,949 2,46.5

53.5 1,)28 2,672 1,5.56

444 S,OOO

22,000 .5,600

S 21),600 hE 1,114 fr .5,000,000

m{r 2, 000

fr fr fr DM DM

f

),500 48,06.5 6,93.5

496 .58,996

6,93.5

l6,9l.J-j .5,457 6,902 1,498 ),718 7,482 L~, 3.57 1, 243

14,000 61,600 1.5,680

10,000 3,199

14,286 280

27,76.5

12, 8L~8 1,152 6,000

35,000 1.5,000 2,6)2

Sv{ fr

642,419 57,.581

300,000 147,000

6),000 10,000 )0,000 6.914

79,546 1,152

. . 227,907 2),767

)) Total Extern~l Debt - Yugoslavia's total external debt consists of:

a) Pre-1vorld \'1ar II debts \'rhich have not yet been definitely settled (See Page 1).

b) i. nationalized property debt $ 50 mill~on (See Par. 2(a).) ii. new debts 228 million (See Par. 2(b).)

Total b) $278 million In addi tion Yugoslavia has drawn $9 million on the I .r\:I.F.

. ., . / ...

- 31 -II. External Service Payments

Required service payments on post-v~-o!'ld illar II de-ots and expectedpayrnents on.Frent:n-held pre-1ior1d \iar II bonds, are listed belot,,_ (For additional details see Table A-2) .

(expressed in thousands of U.S.$)

Pay'ts on Total French paynents

Total I!0st-~io!'ld 1'[ar II Debt pre-t'lar including Service Payments by Debt II Service Payments 1/ bond zerviee T~e of Currenc~ out- Amorti- Inter- interim on French Ster- Belgian

Year standing zation est Total settlement bonds ]j Dollar ling francs 1951 254,076 15,126 3,152 18,278 560 18,838 4,073 6,883 3,247 1952 265,077 54,330 7,719 62,049 934 62,983 7,669 10,553 10,140 1953 211,056 26,574 5,680 32,114 1,120 33,234 4,063 4,704- 3,594 1954- 182,313 44,519 6,120 50,639 50,639 8,160 11,525 3,733 1955 139,791 L1-8,836 5,048 53,884 53,884 9,601 14,871 3,568 1956 67,603 18,288 2,807 21,095 21,095 9,313 10,923 600 1957 49,644 18,894 3,075 21,969 21,969 9,029 12,320 600 1958 30,749 17,472 3,030 20,502 20,502 8, 74LI- 11,138 600 1959 1},275 7,618 290 7,908 7,908 7,308 600 1960 5,656 3,272 82 3,354 3,354 2.,754 600 1961 2,383 1,083 8 1,091 1,09], 491 600 1962 1,300 600 600 600 600 1963 700 700 700 700 700

(cont1d) - Service Pa~'TIlent s by ':i:y-:Je of t;urrency

?:..i 8\,le- JJa- ?lgy- :ror""le-Deutsche 5rench Svliss ... 'l.ustrian

Year marks francs francs schilli'Ylgs 1951 973 1, 09L~ 927 1952 21,508 4,601 1,096 1,850 1953 4·,411 5,430 8,010 2,298 1954 17,160 5,034 793 3,478 195.5 16,080 1956

4,914 793 3,364

1957 1958

Dinars 116 164 180

80 20 20 20 20

dish nish pti~n gian Guilders kronor kr. p01h~ds kronp.r

1,402 123 1,402 720 80 3,200

536 522 522 231

R v

154 151

8

1vi th the exce1}tion of the :?rench he1c1 debt (see ?age s 1 and 2) service on the pre-\';orld ~lar II debt has not ~Tet been resumed sin.ce the 1941 d.efe,ul t caused by the occupation.

V Does not include any payments on the Frep-ch and S1;Jiss natianalized proyerties after 1955.

gj Includes service payments on pre-~lorld ~'lar II Yugoslav -oonds 1Jayable i!l French francs. HOvlever, the principal amount of these i:>onds is not included in the first column of this Table. 11 .Amount outstandinc; as ner June 30, 1951. (Service payments shown are for the whole year of 1951).

Table A-I:

-32-

posr .. C;.':.LD viAE II EXT!:.rtiJAL DEBT OF YUGCSLA VIA

(In thousands) Page 1

Amount outstctnding - June 3o,i~~

Item In currency Expressed in of paynent U.S. dollarE

--------------------------.----------------------~~.

N.A'rIOHLLlZED PROERTIES SVd. tzer1and France United ":ingdom Belgium - payable in Belgian francs

payable in dinars ST;eden Israel DeJml.ark !Jon'ray

Total nationalized properties

DOLLAR DEBT Export-Import Bap~ 3 1/2% - 1961

out3tanding undisbursed

B.l.So 1 1/2 - 2 1/4%, 1950-1952 I.B.R.D. 3%, 1949-1951

Total dollar debt

ST~RLI1:G LOliNS ~8,OOO,OOO loan 5%, 1949-1955-outstancling

undisbursed Revolving credit 5~, 1950-1952 ~4, COO, oeo loan 1..; 1/2,;, 1951-1958

outstanding undisbursed

;"3, 000, oeo loan 4 1/2;;, 1950-1953 Qutsta:1ding undisbursed

~2,COO,OCO loan 4 l/2~, 1951-1~58 outstanding undisbursed.

Total sterlin; loans

LOAr;S EI!Ci. OrEBil. GGVEHHI,EIlI'S France - military loan, 1951-1955 11 Austria 3 1/2%, 1951-1955 E~JPt - cotton loan, 1950-1951, no interest r;orway - food loan 2,;, 1951-1955

Total loans from other gov0rnments

See footnotes at end of table.

S"ll fr 10,202 1/ Fr fr 5,009,200 T 3,291 :0

B fr 350,000 Din 8,000 SKr 13,100 Din 18,200 DKr 1,000 l:Kr 215

4~ 48,065 ~r' 6,935 ~, 3,500 'til

~ 496

'n' 58,996

T 6,051 ~

~ 1,949 ::, 5, GOO Y T 1,328 :0

T 2,672 ~

~ 2,465 T 535 :!:!

*' 1,556 T ~44 :0

T ~OOO ="

Fr fr 5,000,000 S 213,600 W ~ 1,114 I~Kr 2,000

$ 16,326 , ..... -.r

14,312 9,215 7,000

160 2,531

364 1l~5

30

50~O83

48,065 6,935 3,500

496

58,996

16,943 5,457

lL,oooY

3,718 7, ~(j2

6,902 1,498

4,357 1,243

61,600

14,286 10,000 Y 3,200

280

27,765

- 33 ...

Table A-I: POST HORLD \~AR II j ··EXT~RNAL DEB~" OF YUGBSLAVIA - Continued

(In thousands) Pa.ge 2

Amount outstanding - Jlli~e 30, 1951 Item In currency Expressed in

____________ --__________________________ ~o~f_p~a~y~m_.e_n_t__ U.S. dollars

ar:3R DE:8T S Germany medium-tenn credit 7.2%, 1950-1955

short-term credit 5.57~ of. 1. 757~ outstanding undisbursed

Belgian bank credit 5 1/4% - 6%, 1950-1955 outstanding undisbursed

Belgian exporters 5 1/4%, 1950-1952 S~~ss bank loan 4 3/8%~ 1948-1953 11 Netherlands ship loan 5 1/2%, 1950-1952

Total other debts

DM

DM DM

B fr B.£r B fr Sw fr f

147,000

59,367 5,633

642,419 57,581

300,000 30,000 10,000

• • C/ • • • • • • • • • • • • • • • • • • • • • • • • • • •

RECAPITULATION BY CUnr~EI'!CY Sterling T 25,291 !!S

u.s. dollars $ 58,996 Deutshe marks DM 212,000 French francs Frfr 10,009, 200 Belgian francs B fr 1,350,000 Swiss francs Sw fr 100,835 Austrian schillings S 213,600 Egyptian p01h*1.ds ~ 1,1l4 Guilders f 10,000 SYlie dish kronor SKr 13,100 Dinars Din 26,200 NOI'iiregian kroner NKr 2,215 Danish kroner DKr 1,000

Total post-Uorld Uar II debt

~

Notes: The follo'wing exchange rates were used: ;b = ~12(oj80; B fr 1 = ~~O.02; DKr 1 = (~0.,14478; ~l = Fr fr 350; IJKr 1 = ",,0.14; SKr 1 = ~0.19324; Sw fr 1 ::= ~rOo23048; S 1 == ~10.04682; ~ 1 ;:: :j2.87l6; Din 1 = ~10.02; f 1 = (10;..26316; ~; 1 = DE 4.2.

35,000

13,700 1,300

12,848 1~152 6,000 6,914 2,632

792546

70,815 58,996 50,000 28,598 27,000 23,240 10,000

3,200 2,632 2,531

524 310 145

277!99Jj

11 Y

This arr.ount was given by the Yugoslav Government in dollars. The Sw~ss franc amount vias COTjlputed by I.B.a.D. It is not definitely knmvn hoYr much of this is disbursed. Of the ~5, 000, 000, ~2, 500,000 vall be from the LIidland Bank and ~1,500,ooo from the \"/estminster Bank. Up to July 1, 1951 the follo",'.ling has been disbursed on these two items:

IvIid1and Ba~ Westminster Bank

~ 2,395,491 1,303,509

-34-

Table A-I: POST :;ORLD UAR II

Footnotes continued -

£XT:itHAL 1JI:3T L:F YUGCS1A VL';' - Continued (In thousands)

Fage 3

T~e re~~ining ~1,000,000 is in the form of a three-months commercial credit •. It is not knQ'!.'ID hOT! much of this is outstancling~

11 Interest rate is not knOTffio

Y'l;his ar.lount was given by the Yugoslav Government in dollars. The schilling ar.1ount YfaS COr.lputed by I. B.R.D.

~ Does not include .,.9, 000, 000 owed to I .M.F • 6/ J:'~s f'ar as inforr.:ation is available the follovting al.:ounts are outstanding - and undisturseQ:

Expressed in thousands of U.S. dollars

Outstanding: Dollars Sterling Deutshe marks Gther currencies 'iotal

Undisbursed: Dollars ~terlin~~ De~J.tshe r:la~ks

Total

----52,061 55,135 4&,700 980 1eO

254, 076

6,935 15,630

1,300 23,915

11 Secured b~r a pledge of ~old. 'rhe effective intel"est rate at the rreserlt tir.e is }~ 3/8;'0. lim;ever, the agreeltient provides that the interest rate vlill be 2 3/4;~ hicher tItan the reciscoun-0 rate of the Sruss i·;atj.onal ,,.,a.n:': (wLich is no-:.; 1 1/2~;) plus 1/8;; service charge.

--'115 .. Table A-la: PRE-- ~'OrtW .1.dR. II EXT::i{HAu l)EBT Oi? YUGOSLAVIA

(In thousands) Page 1

Amount outstanding - April 5, 1941 In currenc~T of ayment Exnressed in Gross Net 1 U.S. dollars

,':'L1t\i{ BONDS Cerbs, Croats & Slovenes 8%, 1922-1962,

Series J,\ (, 10,948 9,090 9,090 <;; 'tl'

Serbs, Croats & Slovenes 7('/ /tJ~ 1922-1962, Series B 19,109 13,913 13,913

5~ Fu.~din3 bonds 1933/1931 5,952 3,716 3,716 State :.tge. Bank 7'fo, 1927-1957 5,060 2,511 2,511 State i.Lt~e. Bank :r'unding bonds 5%,

1933/37 459 410 410 :otal dollar bonds 42,328 29,640 29,640

.;riillLIl:~G Dl::BT Bonds

Serbia 4~; Gold 1895-1?75 T 17 ~ 17 48 ~

:'.ontenegro 5,;, 1909-1947 143 1h3 400 5% FUL~din~ bonds 34 34 95

Treas~ff bills 1939/40 141 141 395 fotal sterling debt 335 335 938

FRENCH F:tL\~·iC DEBT Pre-.ior1d ~Jar I bonds

Serbia 4% Conv. 1895-1975 fr 226,891 fr 226,897 2/ Serbia 5% 1:onopo1y 1902 35,731 35,731 Y Serbia 4 1/2%, Railvmy & Rearmament

1906 58,755 58,755 Y Serbia 4 1/2;;, J.ai1way & Com;}letion of

nearrnament 1909 &erbia 5% loan - liquidation of "far

77,829 77,829 Y expenses and needs of govt. 1913

Serbia 4 1/2% ~drr~~istration of Funds 190,489 190,489 3.1

I"tge. bonds 19J!J 21,296 21,296 Y Serbia L 1/2~ hmnin. of Bonds Communal

Bonds 1911 23,1l5 23,115 Y. Serbia ~ed Cross Lotte~J Loan 1907 14,879 14,879 ~ I..iOlitene::ro 6%, 1913 352 352 Caisse Con..r:lUne 273,951 273,951 Y

Post .orld '.:ar I bonds iJanube-Save-.Adl'iatic 1923-68 203,300 203,300 fJ International Sta0ilization 7/~' 1931-71 872,532 872,532 11 5% Funding bonds 1933/37 372,968 372,968 Y

Other French Treasu~J ad'~nce5 5'.-1 1923 291,193 291,193 Y - I",

3(" 1931 278,690 278,690 3/ I", Treasury bills 1939/40 261,305 261,305 ]I

Total French franc debt 3,203,282 3,203,282 Y

See foot.noteD at end of table.

- 36-Table A-la: PRE-~IO.itLD UAR II EXTERNAL D2BT OF YUGOSLAVIA - Contd.

SlUSS FrillNC BONDS State I.Itge. Bank 7%, 1938 5% Funding bonds 1933/37

Total S1'QSS franc bonds

Or:HER DEBT Treasu~ bills 1939/40

Kc (Czechoslovak bills) Belga (Belgian bills)

Total other debt

Total pre":.Torld Har II debt

(In thousands) Page 2

Amount outstanding April 5, 1941 In currency of payment Expressed in

Gross Net 17 U,S. doll~rs

Sw fr 8,428 1,108

9,536

Kc 500,000 B 3,153

8t;·v fr 8,428 1,108

9,536

Kc 500,000 B 3,153

1,942 255

2,197

10,000 315

10,315

Note: The follovring exchange rates were used: !.l = 2.80; fr 1 = ~(0.3267; fr 1 = yo.0663; ~vl = fr 350; SVT fr 1 = 't~0.23048; Kc 1 = :t~Q.02; B81ga 1 A

;rllO.10(t

Net of bonds owned by the State Investment Banl<. These issues are expressed in terms of the gold franc.. The exchange rate at time of issue was fr 1 = :,(0 0 3267. These issues are expressed in terms of the gold franc. The exchange rate at time of issue was fr 1 = ~j;Oc0663. The dollar equivalent at the time of issue of the securities would be ~p.581j570,000. At the present French franc exchange rate, the dollar equivalent would be ~;>9, 152,2-34. Dollar equivalent of the total debt, with French franc debt at the value at time of issue, would be ~~624, 660, 000. If the French franc debt was taken at the current exchange rate, total debt would b~ ~1'52, 242, 234.

Table .1\-2: : STI.u~T. _ I~.T.. ;::i ... :s ._J.:' .~2:' _1.'i'IC ... ~ ~. ~J.Y;·L l::;:ci C~: Tj': . ........ _ ..... .L D3;;T u:t YLJ~GSL..·1.vIA

Year

19.51 l.I 19.52 19.53 1954 1955 1956 1957 1958 19.59 1960 1961 1962 1963

1951 !I 19.52 1953 1954 1955 1956 1957 1958 19.59 1960 1961 1962 1963

Amount out-

Amount Payments out-

(In thousands of U.S. doll~rs)

liationalized Prouerties Amount Amount

payments out- ?n.ym~nts standing st~din~ stnnding

out- P~yments standing

i3ele;ium Denmark Dinars Be1t::inn franc~

1.60 20 7,000 300 140 20 6,700 300

1/}5 123 80 80

120 20 6,400 300 100 20 6,100 600 80 20 ),.500 600 60 20 4,800 600 40 20 4.300 600 20 20 ),700 600

),100 600 2,.500 600 1,900 600 1,300 600

700 700

1Tor\'1ay S,"eden 30 2,531 30 2,531 720

S\l{i t zer lruld gj 16,326 624 16,056 793

30 8 1,811 536 15,263 793 23 8 1,27.5 522 14,470 793 15 8 753 522

8 8 231 231 1),677 793

France V

14,312 280 1.4.032 466 13,566 560 l3,Cc6 114.36 11~5(O 1,432

United KinGdom 9,215 1,417 8,506 1,417 7,090 Ith17 5,673 1,417 4,256 1,417 2,839 1,417 1,422 1,422

See footnotes at end of table.

pn::;e 1

A.noUllt out- Fr~ymen"lis

stal1din~

Israel

364 96 361~ 144 220 160

60 60

To tal 3../ §j 50t08~ 2,860 i'i" .. 4'39 3.940 ~4/5CO 3,794 ~G,7C7 4.856 35)551 4,792 7,707 2,276 5,762 2,042 3,720 620 3.100 600 2,500 600 1,900 600 1,)00 600

700 700

I:"­«\

I

Table A-2: ESTn'U~'mD INT:b.t.l:;ST .alID Ai·IORTIZ_-iTION ?AYMEHTS Ol;r T}C :EXTl'~PJTA1 DEBT OF YUGOSUVIA ... Contd.

(In thousands of U.S. dollars)

Amount Pa~~ents Amount Pa~~ents ~~ount payments P~ge. 2

out- Amort i- In- out- Amorti- ---rn- out- Amort i- In-Year standing zation terest Total standing zation terest Total standing zation terest Total

Dollar debt 11/ Sterling loans 9 ~otal sterling debt 11 195111 52 ,0.61 2,59.3 1,480 4,07.3 45lJ920 5,303 16.3 5.,466 55!' 135 6,720 16.3 6,883 1952 57,400 5,776 1,893 7,669 56,297 8.,697 439 9,136 64,803 10,114 439 10,553 1953 51,622 2,276 1.,787 4,063 47,600 2,800 487 3,287 54,690 4,217 487 4,704 1954 47.,346 6,475 1,685 8,160 44,800 8,400 1,708 10,108 50,47.3 9,817 1,708 ll~525 195.5 42,868 8,172 1,429 9,601 36,L~OO 11,200 2,254 13,4.54 40,656 12,617 2,254 14,871 1956 34,696 8,172 1,141 9,313 25,200 7,840 1,666 9,506 28,039 9,257 1,666 10,92.3 1957 26,522 8,172 857 9,029 17,360 8,680 2.,218 10,898 18,782 10,102 2,2l8 12,320 1958 18.349 8,172 .572 8,744 8,680 8,680 2,458 11,138 8,680 8,680 2,458 11,138 1959 10,175 7,018 290 7,308 1960 3,156 2,672 82 2,754 1961 483 483 8 491 1962 1963

195111 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963

280 280 280 280 140

liJ'or\'lay - food loan

140 140

6 .3

See footnotes at end of table.

146 143

To tal :i:Jor\;regian kroner debt '1J Egypt - cotton loan ~

310 J,200 310 J y 200 3,200 3,200 310 8 8 30,3 148 6 154 155 148 3 151

8 8 8

, co (T\

a

Year

1951 11 19.52 1953 195L} 1955 1956 1957 1958 1959 1960 1961 1962 1963

1951 11 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963

Table .41.-2: :JS~Ll:~::,~L EZ2:.:-":' S~I .. ~.]) .:l..L_iTI:_·:.:':I~ ... : ... .i~Y::~l;TS I.!. ... .!~. ~~~::;._;:l..u I '':''T *j.,:' YUt~.I3~· .. t~VI.t;' - Contd.

(I:!l t:·,ol1s~n(l~ of U. s. l~oll.·~.rn) ---____________ . ____________________________________ . ___________________ Pn~e 1

payments Amount PP..~1ffients _l\mo'mt Payment s Amount out .... A:::ort i- In- ~otu1 out- A.1Jlorti- In- Totl.:.l out- Ar::orti- In.... Total

stunding zution terest stui,1Cl.il1{; zL.tion ter€:st stanain{; zu.tion terest France - mili t[l.ry loan ill Total French franc debt V 11 Austripn -c-r-e~d-:-i ... t·-----

14,286 254 254 28,598 534 534 14,031 3,201 3,201 28,751 3~667 3,667 10,830 3,750 3p 750 25,084 4,310 4.310 7,080 ),598 ),598 20,774 5.034 5,034 3,482 ],482 3,482 15,740 4,914 4,914

Netherlands ship loan jj

2,632 1,316

1,316 1,316

86 86

1, L~02 1,402

Belgian credits 1Q}

20,000 17.200 8,400 5,600 2,800

2,800 8,800 2,800 2,800 2,800

147 1,040

494 333 168

2,947 9.840 3,294 3,133 2,968

10,000 10,000 19500 350 1,850 8,500 2,000 298 2,298 6,500 3,250 228 3,478 3,250 3~250 114 3.364

Totr'.l .J3e1gicn fr:mc debt JJ 27,000 23,900 14,800 11,700 8,300 4,800 4,300 3,700 3.100 2,.500 1,900 1,300

700

3,120 9,120 3,120 3,420 3,4·20

600 6co 600 600 600 600 600 100

147 1,040

494 333 168

3,247 10,140

),.594 3,733 ),568

600 600 600 600 600 600 600 700

See footnotes Qt end of t~ble.

I 0\ ('l'\

Year

1951 JJ 1952 1953 1954 1955 1956 1951 1958 1959 1960 1961 1962 1963

1951 11 1952 1953 1954 1955 1956 1957 19.58 19.59 1960 1961 1962 t2.6 .. 1

1 2 -'STI"'rTr":"'T\ ---r.r:::>~sm . '""1""1 "'OT'''''''I~''TIO'''' -.,·y·...,·lm,.... 0-- r--r:~-:-' ... ·-rm-' ... ·'1"" or DE-T 0";;1 YUGOSL'VI' d Tab e A-,;,;.: _J lULt:...:.JJ ll'l~.!.l.J..i 1: ~ . .L' 11.1 .... tl .. ,-.:. •. .1."'-=1. 1· ....... J.i.l.0 l~ ~.: __ • ~)\,.L......: .• ..::.a . .!..: Jj J! _-1. .ti _ Cont •

(In thousands of U.S. dollars)

Page 4 Amount P~yments Amount Payments Amount PaYments

out- Amorti- In- Total out- Amort i- In- Total out- Amort i- In- Total standing zation terest standing zo.tion terest stal}ding zation terest

German credits S,,,iss bank loan Y Total S\'liss franc debt 11 §} 48 (!700 50,000 32,100 30,000 15,000

17,900 2,100

15.000 15,000

973 973 6,914 - 303 303 23,240 624 303 927 3,608 21,508 6.914 303 303 22,970 793 303 1,096 211311 4,,411 6,914 6,914 303 7,217 22,177 7.707 303 8,010 2,160 17,160 14,4'70 793 79) 1,080 16, 080 13,677 793 793

Total J20st-~Torld "Tar II debt'lL 8L French Total payments Amount I:a~ments pre-,.,ur including out- Amort i- In- Total bond interim French

..§!andin~ zatton t~~Q..nt settlement bonds 1[ __ BJ 251\076 15,126 3,152 18,278 560 18,838 265,077 54,330 7,'719 62,049 934 62,983 211,056 26,574 5.680 32,114 1,120 33,234 132,313 44 ~9 6,120 50,6~4 50.6g4 139.791 48: 36 5,048 53,8 53,8 67.603 18,288 2,807 21,095 21,095 49.644 18,894 3,075 21.969 21.969 30,749 17,472 3,030 20,502 20,502 13.275 7,618 290 7.908 7,908 5,656 3.272 82 3.354 3,354 2.383 1,083 8 1,091 1,091 1,300 600 600 600

700 700 700 700 Se€i:rootnotes at end of table.

t 0 -::t

I

:mabIe _.t-2: ~STIi·I.A~:D E!T~~;;::.ST ;~'D llI;ORTIZ1;'TIOlJ :;·'..:'i1:·;::11TS Ol~ Tl:: .-:~T:-.HNAL D~jLT ~F YUGOSL.;l.VIA - Conte .•

(In thousands of U.S. dollars)

Service nayments by currencies Year U.S. Pounds S\-liss Belgian French I Eor\'/ec;ian

dollnrs sterlinG francs francR francs±1. ]a-oner

1951 !I 4,073 6,883 927 3,247 1,094 1952 7,669 10,553 1,096 10.140 4,601 1953 4,063 4,704 8,010 3,594 5,430 8 1954 8,160 11,.525 793 3,733 5,034 154-1955 9,601 14,871 793 3.568 4,914 151 19.56 9.313 10.923 6('c 8 1957 9,029 12,320 Goo 1958 8,744 11,138 6ee 1959 7,308 600 1960 2,754 600 1961 491 600 1962 600 1963 700

Egyptian Austrian pounds schillings Guilders Dinars

19.51 1952 1953 1954 195.5 1956 1957 1958 1959 1960 1961 1962 1963

3,200 1,850 2,298 ),478 3,364

See footnotes at end of table,

1,402 1,402

116 164 180

80 20 20 20 20

Paee 5

Danish S':rec1ish D~,utsche

l:roner kronor marl:s

123 973 80 720 21,508

536 4,411 522 17,160 522 16,080 231

",

i ~ -:::r

Table 11.-2: I .. STDilI.TlJD IjITLII:ST AUD Al:Ol,TIZ.nTIOH :J,hYI:1EETS on TJJJ ~XT:,I:lT;~1 DEBT OF YUGOSLAVIA - Contd.

Pa!c;e 6 Footn9tes:

]J Amount outstandinG for 19.51 is as of June 30. payments are for the full year. gj No estimate of payments due after 19.5.5 is availaple. J./ 'Does not include any )ayments on the French nationalized 'l)roperties after 19.5.5. ijj It ~:us [:ssul.~ed the.t tl:e SD.;.:iO umount ~lUS outstur..dir:C on Jan. I, 19.51 c::.ncl 6/30/51• :J I~ 'I/"as assumed that this credit \'/as com"91etely outsto.nding on J['.n. 1, 1951. It vias also as~umed that

interest on this credit is i")aid on the maturity of the bills. Qj It wo.s p.ssumed that this cr~dit uas completely Qutstanclinc: on Jan. 1, 1951. 'iJ Including nationalized properties .:?ayable in this curx'encyo ~ Does not include any pDyments on the Swiss nationalized properties after 1955. 21 On the ~.5,OOOtOOO revolvinG credit it \'las assumecl that tho ~l,OOO,OOO commercial credit portion ':!ould be

fully disbursed and repaid in 19511) It \IaS also assumed that the portions of the loan macle b;y the l·iid1and Bank a.nd the ~\lestminster Banlc \1ere fully cLisbul'Red by July 31, 1951. It '1as Cl-lso aS811med on this credit that interest io payable 011 the IilLturity of the bills o

10/ It 'Jas assumed that 13 fr 140~00o~UOO of the :B fl" 700,000,000 credit \'las outstanding on J.'1,n. 1, 19.51. C'J:

ill It "las ass1.uned that all j!]}'.l?ort-Import Bank loans vlould be comDletely dra\'ln dO\'Tn by the end of 19510 .:f

J2.i At the)resent time the interest rate is unl:no1;ffi. - I f]j Includes French pre-war interim bond settlement for \vhich no principal amount outstanding is sho\'l!l in

this tableo