CEOL
Serb opposition outlines post-election needs

BELGRADE, Sep 16, 2000 -- (Reuters) A Serbian opposition leader said on Friday that a Norwegian pledge of DEM 35 million (USD 15.5 million) in aid if the opposition won next week's elections was welcome but a new government would need much more.

"Serbia's consolidated budget deficit in 2001 will be USD 1 billion because an economic catastrophe befell Serbia in the past 10 years of (President Slobodan) Milosevic's rule," Mladjan Dinkic, leader of G17 group of independent economists, told a news conference.

"We are negotiating with the Norwegian government to expand the aid to DEM 150 million in the first year of the new government. But the DEM 35 million are equally important for the very start."

Norwegian Foreign Minister Thorbjoern Jagland said on Wednesday his country would release DEM 35 million in aid if the democratic opposition won. He said: "We have to give hope to the people that democracy is better than the system they now have."

The Norwegian funds would be used to fix problems in the health system, social care and the labor market.

"We are also negotiating with some other European states on bilateral financial assistance for the new democratic government and we are offering them our expenditure plan," Dinkic said.

His presentation, attended by journalists and diplomats, came just over a week before polls in which opinion surveys put the opposition ahead. But few people believe Yugoslav President Milosevic will give up power, whatever the result.

ELECTION FAILURE RULED OUT

Dinkic was undeterred, refusing to countenance the possibility that the opposition would not take over and outlining the first steps of a new government, in which he would be expected to hold a key financial post.

He said the dinar currency would either be replaced by a new convertible one or left in circulation together with the German mark as part of sweeping reforms he hoped would be backed up by funds pledged at an expected donors conference.

By the end of the year, a new government team led by former central bank governor Dragoslav Avramovic, hoped to bring Yugoslavia back to the IMF and the World Bank.

"We expect that a reform orientation of the new government will help restore membership," Dinkic said.

Such a new government would also immediately start talks with ex-Yugoslav republics on division of assets of the old state, showing new flexibility to break a long-standing deadlock.

"The Yugoslav central bank has in its treasury USD 135 million worth of gold. At least that much was there a month ago and we expect to find it," he added. On top of this, he estimated the foreign exchange reserves at around USD 200 million.

"These funds would help us qualify for so-called bridge loans, which we will be able to draw because the European Union will immediately lift the sanctions," he said.

Serbia, bombed by NATO in 1999 over the role of its forces against majority ethnic Albanians in Kosovo, has been isolated by the West since 1992 for its role in a series of Balkan wars.

While initially borrowing to implement painful fiscal reforms, a new government would work towards creating an environment attractive enough for foreign investors, he said.



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