05/06/2009 05:05

Loan for Economic Revival of Serbia - "WEALTH OF NATIONS"

Loan for Economic Revival of Serbia - The story about monetary chaos on territory of former Yugoslavia would not be complete without mentioning the famous "Loan for Economic Revival of Serbia". In June 1989, the government in Serbia tried to use the general nationalistic enthusiasm for announcing a loan programme which goal was to recover domestic economy. The ulterior motive was to put domestic dinar and foreign currency savings of citizens, as well as savings of temporary workers abroad into a state bank. That money would be further invested in projects for economic recovery. The amount of the loan was to be $1,000,000,000 and 2000 billion dinars (225 million deutschmarks according to exchange rate at that point). The proof of failure is the information that up to the last day, only $86,188,434 (8.6% of the presumed amount) and 290,900,213 dinars were collected. The dinar part of the loan was almost entirely accomplished (98.6%) but the growing inflation has soon made it worthless.

However, the thing that the entire project will be remembered by, is the media campaign which helped it become real. Voluntary nature when deciding to invest in the fund soon became a new citizen duty, since every company whose employees didn't put in enough money in the fund was accused on national television every day. The failure of the loan for economic revival is remembered as the key moment after which Serbian authorities, in future period, have given up using classic mechanisms of collecting foreign currency capital from citizens.

Marko Rakic, Igor Zarol