Download Yugoslavia Country Brief

About FR of Yugoslavia
Population: omitted due to uncertainty
Population per sq. km:..
Population growth:..
Life expectancy: 70 years
Population below national poverty line
%: ..
GDP per capita (2001)): ..%
GDP (current US$)(2001): 10,861
million*
GDP Growth (2001): 5.5 %
* Excludes Kosovo
Sources:National Statistical Offices,
IMF, IFS, WDI 2002 and Staff estimates.
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Overview
The Federal Republic of Yugoslavia’s (FRY) transition to a market economy began more recently than that in its neighboring countries.
However, despite the country's daunting economic legacy, the government's commitment to stabilization and structural reform, backed
by strong donor support, has begun to yield visible progress.
Economic performance has been steadily improving; in Serbia inflation declined from 115 percent in December 2000 to 39 percent in
December 2001, and further to 17 percent in June 2002. The country’s real GDP rebounded after a steep decline of 18 percent in 1999,
growing by an estimated 5.5 percent in 2001, despite the effects of transitional recession.
A program of strong structural and institutional reforms has been initiated in both Serbia and Montenegro, and has already resulted in
improved macroeconomic stability, restored growth, and improved protection for the poorest segments of society.
Focus of World Bank Assistance
The World Bank re-engaged in the Federal Republic of Yugoslavia after the change of government in Belgrade in September 2000.
Formally, FRY succeeded to the membership of the former Socialist Federal Republic of Yugoslavia in the World Bank in May 2001.
The World Bank Group has supported the FRY through a two-phase Transitional Support Strategy. In the first (pre-membership) phase,
the Bank approved five projects financed by grants from a US$30 million Trust Fund for FRY. These grants supported emergency
reconstruction of the energy sector, social protection, private and financial sector development in Serbia and strengthening of coastal
environmental infrastructure in Montenegro.
The second phase provided for a broader program of support for the Government’s Economic Reconstruction and Transition Program
(ERTP) financed under a three year exceptional IDA allocation of up to US$540 million.
World Bank assistance has four key objectives:
Restoring macroeconomic stability. Strengthening budget planning and execution, improving public expenditure management and
financial accountability.
Fostering economic growth. Supporting privatization and improving the efficiency of the economy through restructuring of socially
owned companies. Restoring confidence in the banking sector, supporting improvements in the legal framework of the financial sector,
and improving the supervisory work of the National Bank. Reducing the barriers to trade and the establishment of new businesses,
improving infrastructure and energy supply, and protecting the environment.
Improving the well being of the most vulnerable and building human capacity. Reducing the social costs of privatization and
restructuring of enterprises. Improving the targeting of the social safety net. Improving the lives of the people through better use of
resources in health and education.
Improving governance and building effective institutions. Increasing the transparency of government spending, strengthening
accountability, and building the capacity of the judicial system.
For further details of the World Bank's Transitional Support Strategy for FR Yugoslavia please click here.
Impact on the Ground
Since the Bank’s re-engagement in FRY there has been improvement on a number of fronts:
Significant progress has been made towards macroeconomic stability. In Serbia, inflation declined from 115 percent in 2000 to 17
percent in June 2002. Foreign reserves reached US$1.3 billion (equivalent to three months imports of goods and services) as of
end-June 2002. The Dinar-Euro exchange rate has remained stable since December 2000. GDP growth rose to 5.5 percent in 2001
after a steep decline of 16 percent in 2000. Foreign trade has been extensively liberalized and the tax system has been broadly
reformed. It is now simpler, more transparent and provides better incentives.
The social safety net has improved. Pensions and social benefits are now paid on time and the backlog of arrears is rapidly being
cleared. In Serbia, 117,056 families received social benefits and 149,140 farmers were paid pensions. A system of one-off payments of
social benefits has helped shield the poorest families. This is a significant improvement from 2000, when arrears in pensions and social
benefit payments were commonplace. In both Serbia and Montenegro, a number of steps have also been taken to bring entitlements to
pensions in line with revenues, while protecting the standard of living of the poorest pensioners.
Confidence in the banking sector is being restored. In Serbia, four large, insolvent banks have been liquidated and five healthy
foreign banks have entered the market through a bold program to restructure the banking sector. Domestic deposits have risen from
practically zero to more than Euro 500 million as a result of improved regulations in banking.
Private Sector Development has progressed. Substantial progress has been made in revitalizing the enterprise sector, with the
adoption of a new privatization framework, a new law on foreign investment, removal of restrictions on the entry and operations of
SMEs, and the preparation of draft new laws on securities, bankruptcy and secured transactions. According to government estimates,
up to a thousand State and Socially Owned Enterprises will be privatized through tenders and auctions by the end of 2002. The Bank
and other donors have facilitated these efforts through significant support to institution building.
Electricity supply is now more reliable. Restored electricity production in Kostolac 2 thermal power unit , refurbished power
transmission facilities and improved stability of the transmission network enabled Serbia to go through the winter of 2001/2 without
electricity cuts. Moreover, net electricity imports into Serbia in 2001 were 30 percent less than in 2000. Although electricity supply in
Montenegro remains critical, the Bank is working with other donors to reduce demand and system losses, and to improve the financial
position of the electricity company.
For details of World Bank projects in FR Yugoslavia please click here.
Challenges Ahead
● The Federal, Serbian and Montenegrin governments are engaged in the difficult process of redefining the constitutional structure of
the common state. The finalization and implementation of a new Constitutional Charter, while continuing to further the economic reform
agenda, will be challenging.
● Despite impressive reform efforts and substantial donor funding, economic recovery remains highly vulnerable, particularly to
external shocks to the economy.
●
Strengthening capacity and developing sound institutions of state is essential, and will require a concerted and long-term effort.
● Improving the business environment and developing both a modern regulatory framework and an independent judiciary, will be
crucial for a return to sustainable growth.
World Bank Partners in the Federal Republic of Yugoslavia
SECTOR
Energy
Welfare
Financial Sector
Private Sector
Labor
Health
Environment
Education
LEAD NATIONAL AGENCY
Ministry of Energy/EPS/EPCG
Ministry of Social Protection/Pension Insurance Fund
Central Bank/BRA/SMECA
Ministry for Privatization/ Agency for Privatization
Ministry for Labor/Employment Agency
Ministry of Health/Health Insurance Fund
Ministry of Environment/Crnogorsko Primorje
Ministry of Education
PARTNERS
USAID/EAR/EBRD/UNDP/SIDA
UNDP/DFID/EU/Canada/ECHO
USAID/UNDP/EBRD/DFID/Switzerland
USAID/UNDP/EIB/EBRD/EAR/Japan
DFID
EAR/WHO/ UNAIDS
EAR/UNDP/Japan
Switzerland
World Bank Lending to the Federal Republic of Yugoslavia
Total Lending as of July 1, 2002 : US$172 million
(in nearest US$ million)
Commitments
Disbursements
Total Commitments by Sector* since 2001
(in nearest US$ million)
2001
-
2002
172
70
Total
172
70
* A new Bank sector and thematic coding system was introduced in FY02. Under this new system, themes represent the development
objectives of the operation, whereas sector codes for investment operations reflect the parts of the economy receiving direct support,
and for adjustment operations, the sectors being impacted by the operation's conditionalities. Thus, a given adjustment operation may
span a number of sectors depending on the reform measures being implemented by the loan and may, for example, show up in
education, health, trade and industry or other categories, even though there may not be a direct investment in that sector.
Fiscal year from July 1-June 30.
For more information please contact:
In Belgrade: Vesna Kostic, phone: + (381 - 011) 30 23 700, fax: + (381-011) 30-23-732
E-mail: [email protected]
September 2002