|
The World Bank
Europe and Central Asia Region
This
document is also available in PDF format (16 KB)
Press Backgrounder
The World Bank and
the Federal
Republic of Yugoslavia
The Federal
Republic of Yugoslavia (FRY) has succeeded to the Socialist
Federal Republic of Yugoslavia’s membership in the World Bank
after fulfilling the necessary conditions vis the International
Bank for Reconstruction and Development (IBRD) on May 8 and the
International Development Association (IDA) on June 11 2001 1.
In order to provide
assistance rapidly before membership was re-established, in March
2001 the World Bank’s Board established a US$30 million Trust
Fund for FRY. The fund supports efforts to improve economic
conditions in the short-term and assists the government in shaping
its longer-term policy agenda. Projects financed by the fund
cover private sector development and financial sector reform
as well as the rehabilitation of the electricity and waste water
infrastructure. It also provides funds to strengthen the
social provisions for the poor and vulnerable.
As part of the
membership package, the Board agreed to grant FRY temporary
exceptional eligibility for funding from the International
Development Association, the World Bank’s concessional finance
facility.
At
the same time, the Board approved a Transitional Support
Strategy that sets out a program of support for FY02. It
also agreed a plan for clearing FRY’s IBRD arrears which
currently total about US$1.7 billion. Although there is
agreement on modalities, the arrears will take several
months to actually clear. Only when this takes place can FRY
access regular Bank financing, as distinct from resources from the
Trust Fund. This is likely to happen in the first part of
Fiscal Year 2002 which begins on July 1, 2001. The package
approved by the Board provides for up to US$540 million in IDA
lending over a three year period.
Most recently, the
World Bank, in cooperation with the European Commission, and in
close consultation with the FRY Government, has prepared an
Emergency Recovery and Transition Program for discussion at the
June 29, 2001 donors’ conference in Brussels. The program
includes policy and institutional reforms, initiatives to promote
investment and grow the economy, and social programs to improve
health, education and other social services. It also identifies
urgent balance of payments and budget needs for 2001. Total
external financing needs over three to four years are set at
US$3.9 billion. Of this total, US$1.25 billion is required in
2001.
In addition to
joining World Bank and IMF, FRY has become a member of the
European Bank for Reconstruction and Development, and has
initiated discussions with other international creditors about
normalizing financial relations—a key step in international
re-integration.
|
Background
The
Federal Republic of Yugoslavia has embarked on a reform
program centered on transition to a market economy.
FRY was formed in 1992 out of the Republics of Serbia and
Montenegro as the former Socialist Federal Republic of
Yugoslavia (SFRY) was breaking up in conflict. Nearly ten
years of strife, international isolation, and poor economic
management, have left a daunting legacy. GDP is 40 percent
of its level at the start of the decade - and the number of
poor has doubled.
With
decapitalized, state- and socially-owned enterprises,
insolvent and deeply mistrusted banks, and over-committed,
poorly functioning social safety nets, FRY must now catch up
with reforms begun a decade ago by many of its neighbors in
Central and Eastern Europe. The process will be made more
difficult by large and mounting fiscal pressures, a
crippling external debt, weakened governance, and
post-conflict challenges that include rebuilding damaged
infrastructure and meeting the needs of a large population
of refugees and displaced. Decisive reforms and concessional
assistance from donors will be needed for FRY to move toward
sustainable recovery and international re-integration. |
1
The conditions for succession to the SFRY’s membership were
outlined in a Board meeting of February 25th, 1993. Four other
successor states to the SFRY, Bosnia-Herzegovina, Croatia, Slovenia,
and the former Yugoslav Republic of Macedonia, have also become
members of the World Bank. With the succession of the FRY, which
will be retroactive to February 25, 1993, IBRD membership now totals
183 countries; membership in IDA now totals 162.
|
