Yugoslavia Devalues Dinar by 30% to Revitalize Economy

Prime Minister Ante Markovic devalued Yugoslavia’s dinar by more than 30% as part of an effort to revitalize the crisis-torn country’s moribund economy and salvage his program of Western-style economic and political reforms.

It was the second time this year that Markovic was forced to slash the value of the Yugoslav currency, raising the exchange rate from 9 dinars to one German mark to 13 dinars to one German mark.

Under a formula employed by the International Monetary Fund, the change represents a devaluation of 30.77%.

Markovic announced the change in a speech to a joint session of the federal Parliament in which he made a renewed plea for approval of basic reforms designed to transform Yugoslavia from 45 years of Communist rule into a free-market democracy that can be integrated with Western Europe.

The prime minister’s plan is aimed at restoring economic stability and discipline until the six republics resolve a dispute over the future of the multi-ethnic federation that could push it into a civil war.

The plan has been endorsed by the IMF, other international financial institutions, the United States and Western Europe, but rejected by the individual republics.

“The implementation of the reforms is the only way which can extract us from the crisis,” he said in his 90-minute nationally televised address. “We simply do not have any other choice.”

Opposition by the republics to the reforms, which began in January, 1990, has halted the process, leaving Yugoslavia facing an economic catastrophe that would further enflame tensions produced by the political and ethnic tensions.