Yugoslavs end year drowning in zeros

January 01, 1994|By Dusko Doder | Dusko Doder,Contributing Writer

BELGRADE, Yugoslavia -- Yugoslavia ushered in a new year with a million percent monthly (yes, monthly) inflation rate that has plunged this once-prosperous heart of the Balkans into deep poverty and chaos.

The end of 1993 was also marked by the first signs of serious social unrest that diplomats here fear would lead to emergency rule.

In releasing the staggering inflation figures, the government Statistics Bureau said the cost of living rose over 6 billion times during 1993. Retail prices in December were 1,790 times higher than those in the previous month.

Even these figures have only symbolic value. They were made on the basis of the foreign currency black market, which is the only market that matters here.

When the statistics bureau made the announcement Thursday, one U.S. dollar was fetching 3 trillion Yugoslavia dinars, up from 1.1 trillion Wednesday.

Yesterday a dollar was worth more than 6 trillion dinars. In 1990, before the inflation began, a dollar was the equivalent of 10 dinars.

Western diplomats contend that this tops Germany's Weimar Republic's hyper-inflation in 1923 and that it is no longer possible to accurately calculate the monthly rate.

"I know of no model for this; it has gone beyond calculation," said one.

To avoid the problems of the Weimar Republic, when Germans '' carried their wages in wheelbarrows, the Yugoslav government has issued bills in ever-larger denominations.

The latest is a 500 billion dinar note. It and the 50 billion note are the principal notes in circulation.

The problem is that shops and kiosks are unable to give customers any change.

People who do not have the exact change either have to forgo their daily newspaper -- which costs 150 billion dinars -- or buy something else.

Since there are no cash registers that can handle totals running into the trillions, the government this week decided to bring in new notes and chop off nine zeros from the existing notes.

In two previous loppings earlier in 1993, another nine zeros had been wiped out.

Monetary madness

The country's monetary madness was criticized this week by senior financial specialists. Vojislav Tomic, treasury chief at the Yugoslav National Bank, said the federal mint is the only firm in Yugoslavia that works around the clock.

"We will never get out of this pace unless the government adopts sharper measures to stem inflation," Mr. Tomic said.

He warned that printing presses are overheated and that the mint would not be able to keep going for a long time under the existing conditions.

The government of President Slobodan Milosevic continues to blame the outside world for United Nations sanctions that have strangled the economy of the new Yugoslavia, which consists of Serbia and Montenegro.

But the level of public discontent has visibly risen.

"The leaders are responsible for this chaos," said a Belgrade taxi driver who only accepts German marks in payment.

"They keep saying that things are going to get better, but they are only getting worse."

The effect has been devastating. Life savings have been wiped out. The average monthly salary is 10 marks (about $7), or the price of 10 loaves of bread. A bottle of local rakija on New Year's Eve was selling for almost 100 marks. One kilogram of chicken is 73 marks. In the markets, shoppers buy fruit and vegetables by the piece.

Strikes by coal miners, physicians, shopkeepers, railway engineers, bus drivers and power-plant works have sharply curtailed virtually all services.

The government has called on the military to provide essential transportation services using army vehicles.

After compulsory power cuts, a last-minute deal was worked out with the striking coal miners to supply sufficient amounts of coal to a local power plant so that Belgrade's 2 million residents could celebrate New Year's Eve.

As long as the U.N. sanctions remain in effect, there's little the government can do to fight inflation, according to independent economists.

Demand hard currency

The flow of paper from the federal mint is the only source of cash for millions of workers and about 1.5 million pensioners.

The striking miners, however, are demanding to be paid in hard )) currency to protect their standard of living.

Local newspapers are reporting that the government intends to unveil a new anti-inflationary program in 1994, capping average salaries at $20 a month and paying out equal pensions across the board.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.