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 State Union

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kosovohp
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Number of posts : 391
Registration date : 2010-09-22

PostSubject: State Union   Tue Oct 19, 2010 12:49 am

An extended period of economic sanctions, and the damage to FR Yugoslavia's infrastructure and industry caused by the Kosovo War left the economy only half the size it was in 1990. Since the ousting of former Federal Yugoslav President Slobodan Milošević in October 2000, the Democratic Opposition of Serbia (DOS) coalition government has implemented stabilization measures and embarked on an aggressive market reform program. After renewing its membership in the International Monetary Fund in December 2000, Yugoslavia continued to reintegrate into the international community by rejoining the World Bank (IBRD) and the European Bank for Reconstruction and Development (EBRD). A World Bank-European Commission sponsored Donors' Conference held in June 2001 raised $1.3 billion for economic restructuring. An agreement rescheduling the country's $4.5 billion Paris Club government debts was concluded in November 2001; it will write off 66% of the debt; a similar debt relief agreement on its $2.8 billion London Club commercial debt has been reached in July 2004; 62% of the debt have been written off.

The smaller republic of Montenegro severed its economy from federal control and from Serbia during the Milošević era. During the Serbia and Montenegro period, both republics had separate central banks, different currencies - Montenegro first used the Deutsch Mark, then the euro when it replaced the Deutsch Mark, while Serbia used the Serbian dinar as official currency. The two states also had different customs tariffs, separate state budgets, police forces, and governments.

The southern Serbian province of Kosovo, while formally still part of Serbia (according to United Nations Security Council Resolution 1244), moved toward local autonomy under the United Nations Interim Administration Mission in Kosovo (UNMIK) and was dependent on the international community for financial and technical assistance. The euro and the Yugoslav dinar were official currencies, and UNMIK collected taxes and managed the budget.

The complexity of Serbia and Montenegro's political relationships, slow progress in privatisation, and stagnation in the European economy were detrimental to the economy. Arrangements with the IMF, especially requirements for fiscal discipline, were an important element in policy formation. Severe unemployment was a key political economic problem. Corruption also presented a major problem, with a large black market and a high degree of criminal involvement in the formal economy.

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