Serbia and Montenegro Economy - overview

Economy - overview: MILOSEVIC-era mismanagement of the economy, an extended period of economic sanctions, and the damage to Yugoslavia's infrastructure and industry during the war in Kosovo has left the economy only half the size it was in 1990. Since the ousting of former Federal Yugoslav President MILOSEVIC 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 IMF 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 and provide a basis for Belgrade to seek similar debt relief on its $2.8 billion London Club commercial debt. The smaller republic of Montenegro severed its economy from federal control and from Serbia during the MILOSEVIC era and continues to maintain it's own central bank, uses the euro instead of the Yugoslav dinar as official currency, collects customs tariffs, and manages its own budget. Kosovo, while technically still part of the Federal Republic of Yugoslavia (now Serbia and Montenegro) according to United Nations Security Council Resolution 1244, is moving toward local autonomy under United Nations Interim Administration Mission in Kosovo (UNMIK) and is dependent on the international community for financial and technical assistance. The euro and the Yugoslav dinar are official currencies, and UNMIK collects taxes and manages the budget. The complexity of Serbia and Montenegro political relationships, slow progress in privatization, and stagnation in the European economy are holding back the economy; nonetheless, growth may be 4.5% in 2003.

Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.

Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of April 17, 2002