Emergency Joint G24/Consultative Group Meeting
May 5, 1999

Chairmen’s Conclusions

At the Emergency Joint G-24/Consultative Group meeting of 5 May 1999 chaired by the European Commission and the World Bank, the group of donor nations and multilateral organizations gave their strong support to the former Yugoslav Republic of Macedonia to assist in maintaining economic stability and continue economic reforms and to handle emergency costs arising from the Kosovo crisis.

Former Yugoslav Republic of Macedonia’s Minister of Finance Mr. Boris Stojmenov referred to the extremely difficult economic situation that had emerged since the Kosovo Crisis. Mr. Stojmenov stressed that former Yugoslav Republic of Macedonia is at a critical point in its political and economic transition, and that the support of the international community is essential if the Government is to succeed in its ambition of creating strong democratic institutions and a modern market economy in a politically and socially peaceful environment. He urged the donor community to make an investment for peace.

The Government had already carried out extensive price liberalization and confirmed that it was committed to macroeconomic stability, the rapid privatization of all state enterprises, including the major loss-makers in the agriculture sector, and of the banking sector. The Government’s programme also includes measures aimed at mitigating the social costs of reform and improving the targetting of the current social assistance program.

The Emergency Joint G24/CG meeting reviewed the impact of the Kosovo Crisis on former Yugoslav Republic of Macedonia and the country’s ability to maintain a stable macroeconomic framework and social peace, despite the crisis, and appreciated its exemplary role in the region. Delegates said the Government of the former Yugoslav Republic of Macedonia deserves international financial assistance in light of the incremental costs to its budget and the seriously worsened balance of payments situation directly resulting from the crisis. The delegates also noted the Government’s determination to pursue a sound stabilization program as well as to pursue its structural reform programme over the course of 1999.

Former Yugoslav Republic of Macedonia has already succeeded in stabilizing its economy, but the group noted that the country’s economic situation remains fragile, and that it faces major challenges in the months ahead to meet the ambitious targets it has set for itself. Nevertheless, the donors urged the Government to keep the programme on track and fully implement it within the agreed timeframe and to pursue intended reforms of public institutions to manage public expenditures and to provide a regulatory framework for economic development.

The meeting gave special emphasis to the impact on the private sector through higher trade, transport costs and heightened uncertainty in the region. Initiatives to help the private sector to cope with this crisis through political risk facilities, enlarged credit guarantees, and improvements in the investment climate were encouraged. As well as access of Macedonian exports to other markets. Delegates stressed the need for more careful and coordinated monitoring of budget assistance to former Yugoslav Republic of Macedonia. They welcomed the decision to set up monitoring mechanisms, including a special disbursement account to be set up by the World Bank and the European Commission which has worked well in other emergency situations.

The donor meeting pledged substantial financial assistance to former Yugoslav Republic of Macedonia amounting to US$ 252 million. Additional financial assistance was also promised in the coming weeks to close an overall financing gap of over $400 million. Donors agreed to meet again in the second half of 1999 to reassess the financing needs, review progress made, and assess the economy’s financing needs for the year 2000. The European Union pledged budget support of 25m EUROs and will prepare additional macro financial assistance. The World Bank IDA credit of $50m has been submitted to its Board of Directors and a $10m Labor Redeployment Fund is under preparation. The IMF expects to conclude a Stand By Loan of US$32.6m shortly. Substantial bilateral assistance was also pledged at the meeting.