In a move aimed at cutting a 170 percent inflation rate and introducing free-market economy rules, Yugoslavia devalued its dinar currency by 23.9 percent Saturday and ended price and import controls.
The government also imposed a package of austerity measures as part of the sweeping economic reforms that should help in pulling the multinational country of 23 million people out of an economic crisis.The reforms, worked out in accordance with demands by the International Monetary Fund, were apparently an attempt to speed up the signing of an agreement that would allow the East Bloc nation to reschedule its $21 billion foreign debt.
The communist country needs about $400 million in additional funds from Western commercial banks to import the raw materials and various products needed to keep its home market supplied and increase imports to earn Western currency.
On May 16, the government imposed a decree limiting wages and salaries to cut down all forms of consumption.
The measures imposed Saturday lifted controls of about 60 percent of all prices and about 40 percent of imports. Under a new exchange rate one dollar buys 1,925 dinars and experts said the local currency is to continue sliding in its value towards the dollar depending on a daily situation in the Yugoslav bank's foreign exchange market.
The signing of the one-year stand-by arrangement with the IMF will open the doors for rescheduling large portions of the nation's foreign debt.