Current Economic Developments, Lot 70 D 467
Current Economic Developments
No. 221
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Yugoslavia Fund Drawing Approved
The International Monetary Fund on September 22 approved a $3 million drawing by Yugoslavia, with assurances that that country would make every effort to repurchase this amount within two years. This drawing represents the second major contribution by the west in recent weeks to the economic re-orientation of Yugoslavia; the Eximbank having extended a $20 million credit to Yugoslavia on September 8. The conclusion of a UK-Yugoslav economic agreement, which will provide for sterling credits to Yugoslavia, has apparently been delayed as a result of the devaluation of the pound. The British have indicated that the £8 million medium-term credit under this agreement will probably be granted by private London banks rather than by an instrumentality of the government, as had previously been assumed. Short-term credits of £5 million will be extended by private banks, with a government guarantee. An International Bank mission is still in Yugoslavia in connection with the latter’s application for a Bank loan. In the light of discussions with this mission, the Yugoslavs have scaled down to $78 million the projects proposed for the Bank’s financing. The International Bank’s timber credit to Yugoslavia, and that to Finland, are nearing completion as a result of the recent agreement in principle by timber importing countries to use non-ECA dollars to pay for certain timber imports from these countries. In order to provide dollars for the repayment of the $2.7 million loan to Yugoslavia, France has agreed to pay in dollars for $200,000 worth of timber, Italy for $400,000, the Netherlands for $400,000 and the UK for $1.7 million.
The tempo of economic assistance to Yugoslavia has been accelerated [Page 966] with recent reports concerning the seriousness of Yugoslavia’s immediate balance-of-payments position. Other forms of assistance are therefore being considered, with a cotton credit to Yugoslavia among the more immediate possibilities. It is still felt that the long-range prospects for Yugoslavia are good and that Yugoslavia will be able to repay any credits extended when it has completed the reorientation of its economy from east to west.
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