Survey of Republic of Slovenia (2): EC-sponsored talks may help resolve problems - Debt: Relations with the former Yugoslav central bank must be settled
SLOVENIA'S economic prospects would improve significantly if it could settle its relations with the former National Bank of Yugoslavia (NBY), or central bank, establish new relations with foreign creditors as rapidly as possible, and join the International Monetary Fund and World Bank. Relations with the NBY are complicated. Before Slovenia declared independence, any foreign exchange deposits which Slovene citizens deposited in banks in Slovenia were transferred to the NBY. These deposits amount to Dollars 1.2bn. In addition, Croatian citizens in neighbouring Croatia also deposited Dollars 465m into Slovene banks in Croatia. Since independence, these accounts have been frozen. Officials at the the Ljubljanska Bank, Slovenia's largest bank into which the majority of the foreign exchange accounts were originally deposited, are hoping that the the government of Slovenia will guarantee these debts and open up negotiations with the NBY for the eventual return of the deposits. Mr Marko Kranjec, vice-governor of the Bank of Slovenia, or central bank, reckons Slovenes will have to wait years before they can obtain their foreign exchange savings. He says much depends on the negotiations and political atmosphere between Ljubljana and Belgrade. Slovene officials are also anxious to start negotiations on the unallocated Yugoslav federal debt. The federal debt totals Dollars 14.6bn. Of this amount, Slovenia accepts that its allocated share of that debt is Dollars 1.8bn. 'We will not renege on repaying this debt,' said Mr Andrej Klemencic, adviser to Slovenia's Ministry of Finance. The debt-service ratio is about 40 per cent of Slovenia's GDP. Last year's GDP amounted to Dollars 13.5bn. Mr Jose Mencinger, a member of the board of Slovenia's central bank, said servicing that debt should not be a problem. 'Last year, our exports totalled Dollars 3.8bn. That is a decline of only 5 per cent compared to the year before. So, we are not in such a bad position with regard to servicing the debt,' he said. However, negotiating what share of the unallocated federal debt Slovenia should assume is already proving difficult. The unallocated federal debt - which consists of loans to the NBY, or the federal government which had not been specifically earmarked for projects in any of the six republics of the former Yugoslavia - amounts to Dollars 3.5bn. Slovene officials say they are committed to repaying its share of the unallocated federal debt. Mr Kranjec says that the Bank of Slovenia has already proposed negotiations on this issue, as well as trying to discuss the status of the NBY'S foreign exchange reserves, the clearing balances with the countries of the former CMEA socialist trading organisation, and operations of banks. 'This is going to take a long time to settle,' said Mr Kranjec. He and other Slovene economists now believe that the European Community-sponsored peace conference on Yugoslavia could play a role in negotiating issues related to the debt. Resolution of these issues, and recognition by the US of Slovenia, would speed the republic's admission to the International Monetary Fund and other financial institutions.
foreign exchange deposits;foreign creditors;slovene banks;national bank of yugoslavia;yugoslavia;negotiations;independence;unallocated federal debt;slovene citizens;federal government