„СВАКО СВОЈЕ ДЕВИЗЕ ЧУВА“ УНУТРАШЊИ АСПЕКТИ СПОЉНОГ ДУГА СФРЈ 1980–1983.
“EACH PROVINCE AND REPUBLIC MAINTAINS ITS OWN RESERVES”: INTERNAL ASPECTS OF THE SFRY’S EXTERNAL DEBT, 1980–1983

Author(s): Slobodan Selenić
Subject(s): History, Economy, National Economy, Business Economy / Management, Post-War period (1950 - 1989), Accounting - Business Administration, Socio-Economic Research
Published by: Institut za noviju istoriju Srbije
Keywords: Yugoslavia; republics; provinces; National Bank of Yugoslavia; external debt; foreign exchange; liquidity; Privredna Banka Zagreb
Summary/Abstract: During the early 1980s, evident indications of a crisis impacting the Socialist Federal Republic of Yugoslavia emerged, among which the significant external debt, amounting to approximately $19 billion in 1980, stood as one of the most serious concerns. This debt was intricately linked to various aspects of domestic politics and interrelationships among the Federation, republics, and provinces. Subsequent to the implementation of the 1974 Constitution, the republics and provinces were granted considerable au- tonomy, leading to instances where some exceeded their allocated borrowing quotas, as defined by internal agreements within the nation. Between 1979 and 1980, the anticipated balance was exceeded by over 1.3 billion dollars, with Croatia surpassing it the most (approximately 800 million dollars). Profound internal repercussions stemming from the external debt encompassed the collapse of the country’s legal foreign exchange market in the spring of 1980. This led to the insolvency of several banks, notably major ones in Croatia, Macedonia, Montenegro, and the two Serbian provinces (Vojvodina and Kosovo). The insolvency of the Zagreb Economic Bank constituted a critical concern, leading to Croatia’s incapacity to maintain liquidity in 1982 without assistance from the Federation, the National Bank of Yugoslavia, and banks situated in other regions of the nation. The negligent and unlawful actions undertaken by the Zagreb Economic Bank, resulting in delayed debt repayments to several international banks, inflicted damage upon Yugoslavia’s corporate and political reputation on a global scale, notably impacting relationships with Western countries. Commencing in 1980, a handful of solvent banks, predominantly the banks of Serbia (Beobanka and Jugobanka) and, to a lesser extent, Ljubljanska Banka, discharged hundreds of millions of dollars in obligations owed by banks and economic organizations located in other regions of the country. When the federal government sought to enact legal mandates compelling banks and economic entities to deposit a fraction of their foreign exchange into accounts held at the National Bank of Yugoslavia, aiming to fulfil the state’s commitments to foreign nations and facilitate oil imports in 1981 and 1982, banks nationwide violated these laws and defaulted on their obligations to the Federation and foreign entities. Slovenia, Bosnia and Herzegovina, and central Serbia were the only regions that largely fulfilled their obligations. The deficit in foreign exchange was covered by tapping into foreign exchange reserves, which had dwindled to 1.3 billion dollars by the summer of 1983.

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