-
Document of
The World Bank
FOR OFFICIAL USE ONLY
IZLE CO'PY
Report No. P-37713-YU
REPORT AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED FERTILIZER SECTOR LOAN
IN AN AMOUNT EQUIVALENT TO USW9O MILLION
TO
VOJVODJANSKA BANKA-UDRUZENA BANKA
WITH THE GUARANTEE OF
THE SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA
April 13, 1984
This document has a restricted distribution and may be used by
recipients only in the performance oftheir official duties. Its
contents may not otherwise be disclosed without World Bank
authorization.
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
-
CURRENCY EQUIVALENTS
Currency Unit 1/ Calendar 1983 2/ March 1, 1984
US$1 Dinar 93.831 Dinar 130.0
Dinar 1 US$0.011 US$0.0077
Dinar 1,000,000 US$11,000.00 US$7,700.00
FISCAL YEAR
January 1 - December 31
ABBREVIATIONS
BOAL = Basic Organization of Associated LaborCAN = Calcium
Ammonium NitrateCMEA = Council of Mutual Economic AssistanceDAP =
Diammonium PhosphateICB = International Competitve BiddingINA = INA
Petrochemija, KutinaLDR = Less Developed RepublicMAP = Monoammonium
PbosphateMDR = More Developed RepublicNPK =
Nitrogen-Phosphate-PotashP205 = Phosphorous Pentoxide Content in
FertilizerSAP = Special Action Program
SDK = Social Accounting ServiceTPY = Tons Per YearVB =
Vojvodjanska Banka-Udruzena Banka
1/ The dinar has not been maintained within announced margins
since July 12,1973. Its parity is reviewed frequently to ensure
maintenance of externalcompetitiveness.
2/ Period average.
-
FOR OFFICIAL USE ONLY
YUGOSLAVIA
FERTILIZER SECTOR LOAN
Loan and Project Summary
Borrower: The Vojvodjanska Banka-Udruzena Banka (VB) in Novi
Sad,Socialist Autonomous Province of Vojvodina.
Guarantor: The Socialist Federal Republic of Yugoslavia
Amount: US$90 million equivalent, including capitalized
front-endfee.
Terms: Amortization in 15 years, including a three year
graceperiod, at the standard variable interest rate.
Loan Objectivesand Description: The proposed loan would be made
under the Special Action
Program for Yugoslavia and would assist the FederalGovernment in
increasing the domestic availability offinished fertilizer for 1984
and 1985. It would alsoaddress policy and institutional issues
concerningdistribution of fertilizer and the Government's effortsto
modernize and rehabilitate the industry, therebyenhancing the
Government's on-going FertilizerProduction-Consumption program. The
loan would(a) finance sub-loans to fertilizer producers for the(i)
import of raw materials, such as phosphate rock,mono-ammonium
phosphate, ammonia, ammonia solution anddiammonium phosphate; and
(ii) import of spare parts forfertilizer production facilities,
such as corrosionresistant materials, stainless steel piping and
catalystsfor ammonia production; and (b) finance sub-loans
tofertilizer producers for technical and energy studies ofall the
fertilizer plants, with the assistance ofconsultants, in order to
assess their production andenergy efficiency and to make proposals
for improvements.
This document has a restricted distribution and may be used by
recipients only in the performanceof their official duties. Its
contents may not otherwise be disclosed without World Bank
authorization.
-
Estimated Foreign Exchange Costs:US$ Million
Raw Material 57.20Spare Parts 21.00Study 1.72
TOTAL BASE COST 79.92
Price Contingency 9.86
TOTAL 89.78
Front-End Fee 0.22
TOTAL 90.00
Estimated Disbursements:
FY85 FY86(US Millions)
Bank FYAnnual 50.0 40.0Cumulative 50.0 90.0
Benefits and Risks: Through the appropriate application of
fertilizer, theloan will generate additional grain production of
about1.3 million tons (80% wheat and 20% maize), thus helpingto
reduce grain imports, especially wheat, which has,over the past
three years, averaged about 0.8 milliontons annually. In foreign
exchange resources, theadditional production of wheat and maize
would representabout US$208.0 million equivalent. The
majorbeneficiaries of the loan would be individual farmerswishing
to purchase fertilizer on a cash basis and thefertilizer producers.
There are several areas of riskin the loan. To reduce the risk,
after the loan isdisbursed, that the systems for foreign
exchangeavailability to the fertilizer industry and
fertilizerdistribution do not revert back to the existing
systems,the Government has (a) agreed to a mechanism which inthe
future will ensure access by fertilizer producers toforeign
exchange, and (b) provided an understanding thatfuture fertilizer
distribution will be made on the basisof soil fertility and crop
response. There is also apossibility that individual farmers may
not purchasefertilizer on a cash basis to the extent
anticipated,although this risk is slight in that the
limitedfertilizer application by such farmers in the past
-
- iii -
has largely been due to insufficient availability offertilizer,
rather than lack of demand for it. There isalso the risk that the
Government might decide not toproceed with the recommendations of
the technical andenergy studies, although this is remote given its
statedcommitment to rationalization of fertilizer productionand its
decision to borrow for the studies.
Economic Rate of Return: Not applicable
Staff Appraisal Report: YUGOSLAVIA: Fertilizer Sector Loan
(ReportNo. 4649-YU), dated March 29, 1984.
-
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRDTO THE
EXECUTIVE DIRECTORS ON A PROPOSED FERTILIZER SECTOR LOAN
TO VOJVODJANSKA BANKA-UDRUZENA BANKAWITH THE GUARANTEE OF THE
SOCIALIST FEDERAL REPUBLIC OF YUGOSLAVIA
1. I submit the following report and recommendations on a
proposed loanto Vojvodjanska Banka-Udruzena Banka, with the
guarantee of the SocialistFederal Republic of Yugoslavia, for the
equivalent of US$90 million tofinance the import of raw materials
and spare parts for fertilizerproduction, and the cost of energy
audits and production studies in thefertilizer industry. The
proposed loan would be made under the SpecialAction Program (SAP)
for Yugoslavia and is designed to support sector policyadjustments
and lead to more efficient use of existing fertilizer capacity.The
loan would have a term of 15 years, including three years of grace,
withinterest at the standard variable interest rate.
PART I - THE ECONOMY
2. An economic mission visited Yugoslavia in June 1981 and its
report,Yugoslavia: Adjustment Policies and Development Perspectives
(3954-YU), wasdistributed to the Executive Directors on November 2,
1982. Updatingmissions visited Yugoslavia during the last six
months and this sectionreflects their findings. Basic data on the
economy are given in Annex I.
Institutional Setting
3. The social sector in Yugoslavia, which includes
government,enterprises and public institutions, plays the leading
role in economic andsocial development. It accounts for 85% of GDP
and employs over half thetotal labor force. The private sector
consists predominantly of peasantfarms and small enterprises.
Decision making at all levels is governed bythe principle of
workers' self-management, involving a unique set ofinstitutions and
instruments of economic policy. Responsibility forimportant social
and economic decisions has increasingly shifted from thefederal
level to the republics, autonomous provinces and
communes.Concurrently, the control of workers' collectives over
production decisionshas been increased by a restructuring of all
economic organizations intolegally autonomous Basic Organizations
of Associated Labor (BOALs) which arethe smallest units producing a
marketable output.
4. In addition to this strengthening of workers' participation
at themicroeconomic level, the concept of workers' management has
been extended toencompass macroeconomic decisions. A set of
instruments, called socialcompacts and self-management agreements,
enables the participation of alleconomic agents in the formulation
of macroeconomic policy, while maintainingdecentralized
responsibility for policy implementation. These instruments
are used to supplement more conventional monetary and fiscal
policy measures,particularly in the areas of prices, incomes, and
employment.
-
- 2 -
5. The 1974 Constitution also introduced a new framework for
economicand social planning, designed to reconcile decentralized
decision-making withconsistent and coordinated action. The system
of planning first seeks toestablish, through a set of social
compacts, a national consensus on themajor medium-term goals for
the economy. Thereafter, plan formulation isbased on participation
of all economic and social units, including governmentbodies. Once
consistency is achieved, economic units enter into
medium-termagreements on supply, demand and investment intentions.
In case agreementscannot be reached by the prescribed date, state
bodies at the relevant levelare permitted to intervene, but only on
a temporary basis.
Economic Trends and Development Issues
6. The economic development of Yugoslavia over the past two
decades hasbeen impressive, characterized by rapid economic growth
and structuraltransformation. Between 1960 and 1981, GDP grew at an
average annual rate of5.5% in real terms. The share of investment
in GDP has been high throughoutthe period, above 30% in most years.
With population growth at about 1% perannum, real per capita income
more than doubled over this period. Per capitaGNP in 1982 is
estimated to be US$2,840 at 1982 market prices. 1/ The pastthree
decades have also witnessed the growing integration of Yugoslavia
intothe world economy. Between 1960 and 1981 merchandise exports
and importsgrew by around 6% and 8% per annum in real terms,
respectively. However,Yugoslavia's export performance to the
industrial market economies showedincreasing weakness during the
1970s, particularly after 1973.
7. While overall growth performance has been impressive, large
regionaldisparities persist. The Republics of Bosnia-Herzegovina,
Macedonia andMontenegro, each with two-thirds of the national
average per capita output,and the Autonomous Province of Kosovo,
with one-third, are officiallydesignated as less developed regions
(LDR). The difference in per capitaoutput between the most
developed region in the country, Slovenia, and theleast developed,
Kosovo, is 6 to 1. These disparities reflect severalfactors,
notably the greater incidence of low productivity agriculture in
theLDR, their higher dependency ratios and their higher population
growth rates,which averaged 1.2% annually during 1971-81. Since
1965 concessionalinvestment credits have been granted to the LDR
through the Federal Fund forthe Accelerated Development of the Less
Developed Regions and, together withsupplementary resources for
social sector expenditures from the Federalbudget, these resources
account for about 10% of the social product of theLDR.
8. Since 1954, employment in the social sector has increased by
around4% per annum, facilitating rapid outflows from the
agricultural sector.Despite this very good record, substantial
productivity and incomedifferentials remain between the modern
(mainly social) and the traditional(predominantly private)
agricultural sectors. These differentials haveresulted in high
demand for modern sector employment on the part of the rural
1/ According to World Bank Atlas methodology.
-
-3-
labor force. Large numbers of Yugoslavs have sought temporary
employmentabroad since the late 1960s. At its peak in 1973 there
were about 1.1million external migrants. Since 1973, however, this
trend has beenreversed, and returning migrants have added to the
pressure on the socialsector to create new work places.
Unemployment rates have risen rapidly fromabout 7% in 1971 to over
12% in 1982. 1/ The incidence of unemployment ishighly
regionalized; in 1982 unemployment rates ranged from 29% in Kosovo
to
2% in Slovenia.
Recent Economic Developments
9. Yugoslavia today faces perhaps its most difficult
economicsituation since the upheavals which accompanied economic
liberalization in1965. In many respects the difficulties facing
Yugoslavia are similar tothose facing most middle income developing
countries: higher oil prices andinterest rates, sluggish world
trade and more difficult access tointernational commercial bank
credit. The severity of Yugoslavia's economicproblems, however,
also reflects structural deficiencies in the pattern ofYugoslav
development which became increasingly apparent in the seventies.
Inresponse, the Government since 1980 has concentrated on
stabilizing theeconomy and bringing the balance of payments under
control. The mainelements of the stabilization program introduced
thus far have beenrestrictive monetary and fiscal policies designed
to curb investment and toreduce inflationary pressure, and the more
active use of exchange ratepolicies to encourage exports. Increased
reliance has also been placed onmore frequent interest rate
adjustments and the Government has introducedminimum or floor
lending rates for banking system credits in most sectors,with these
rates being adjusted progressively to equal the rate of
inflationover a specified time horizon, which will differ by
sector. At the sametime, imports have been scaled back in line with
the revenues accruing fromexport earnings and more limited foreign
borrowing. Yugoslavia'sstabilization efforts have been supported by
the IMF in the form of athree-year SDR 1,662 million stand-by
arrangement which was in effect fromJanuary 1981 to January 1984.
Agreements have also been reached for aone-year stand-by of SDR370
million, which is expected to be considered bythe IMF's Executive
Directors in late April.
10. As a result of its stabilization efforts, Yugoslavia has
succeededin bringing the current account of its balance of payments
from a deficit of$3.7 billion in 1979 to an e'stimated surplus of
$274 million in 1983. Overthe same period, the current account with
the convertible area has moved froma deficit of $3.3 billion to an
estimated surplus of $300 million. Exporttrends have been erratic
over the period, both in the aggregrate and asbetween market areas,
with, however, a strong showing in exports to theconvertible area
in 1983. Apart from strict demand management policies,
thisperformance reflects a substantial realignment of the real
exchange rate in
1/ These rates are not directly comparable to those in other
countries.They represent the ratio of registered job-seekers
(including somecurrently employed) to the social sector labor
force. The ratio ofregistered job seekers to the total resident
labor force was about 9% in1982.
-
4 -
1983, with a depreciation of approximately 25% against a basket
of currenciesover the course of the year. Import levels have been
cut in each year since1979, such that the nominal value of imports
in 1983 was 13% below its 1979level, representing a real cut of
approximately 31% over the period.
11. Yugoslavia's economic growth has slowed markedly since 1979,
whenGDP grew by 4.2%. In 1980 it grew by 2.3%, in 1981 by 1.4%, and
in 1982 by0.8%. Current estimates are that GDP declined by about
1.3% in 1983. Thisreduction in growth is partly a result of the
controls on domestic demand,but also due to shortages of imported
inputs. Mining and manufacturingoutput has been particularly
affected. There have been marked fluctuationsin agricultural
output. After stagnating in 1980 agricultural value addedincreased
by 2.8% in 1981 and an estimated 7.4% in 1982. Fixed investmenthas
also fallen markedly. Whereas fixed investment increased at an
averagerate of 9.5% between 1975 and 1979, it declined by more than
6.0% per yearbetween 1979 and 1982. Despite these slowdowns in
investment and economicgrowth, Yugoslavia has been able to continue
creating jobs in the socialsector. Social sector employment
increased by 3.2% in 1980, 2.9% in 1981 and2.3% in 1982. Generally
speaking, employment growth has continued to be mostrapid in the
LDR, where the incidence of unemployment is more severe.
12. One of the major goals of the government's stabilization
programhas been to reduce the rate of inflation. Despite
significant declines ininvestment and real domestic demand,
however, inflationary pressures havecontinued. In 1980 and 1981
inflation accelerated to 30% and 38%respectively. In an effort to
bring inflation under control, the authoritiesintroduced temporary
price ceilings on a wide range of goods in July 1982.This policy
met with only limited success, however. Retail prices increasedby
30% in 1982, and by about 58% in 1983. As a result, a temporary
pricefreeze was reimposed at the end of 1983. The persistence of
inflation hasbeen due to a combination of factors. The efforts of
the authorities torestructure the pattern of relative prices to
promote more efficient resourceallocation, stimulate agricultural
production and rationalize energy use haveall put upward pressure
on the price level. The increase in internationalprices since 1979
and the cumulative effects of the substantial depreciationof the
dinar have also considerably increased domestic production
costs.Nominal personal income growth has also proved difficult to
control, althoughthere have been significant reductions in real
personal incomes (totalling25%) since 1979.
13. Yugoslavia's adjustment efforts have been complicated by
adversedevelopments in the international capital markets. Increases
in prevailinginterest rates since 1979 helped push interest
payments from $0.8 billion in1979 to an estimated $2.2 billion in
1983. Principal repayments onmedium- and long-term debt were an
estimated $2.7 billion in 1983. Whilethere is recognition of the
magnitude of Yugoslavia's adjustment efforts, theinternational
commercial banks have tended to adopt a cautious positiontoward
increasing their exposure. This has partly been due to
adversedevelopments in other parts of the world and partly to
liquidity problemsexperienced by some Yugoslav banks. However,
following the successfulconclusion of the 1983 and 1984 debt
restructuring (para. 17), the
-
international commercial banks are expected to slowly return to
limitedfinancial transactions with Yugoslavia, some of which may be
in the form of
co-financing with the Bank.
Medium-Term Prospects
14. In the second half of 1981, a special high level
"StabilizationCommission" was established to devise a framework of
policy and institutionsto guide Yugoslavia's medium-term adjustment
efforts. The final report ofthe commission was issued in July 1983
and has been adopted by the FederalAssembly. The commission's
recommendations call for a decisive shift towarda more open
economy, export-led growth and increased resources to the
exportsector through reductions in domestic demand and active
exchange ratepolicies; they also aim at a moderation in domestic
inflation. The perioduntil 1985 is seen as a transitional phase,
oriented to completing the mostcritical of the ongoing investments
and to abandoning those which are nolonger viable, with the aim of
creating the basis for a different investmentcycle in the 1986-90
period. Even over the longer term the orientation istoward
increases in the productivity of factors of production and
lowerinvestment and output growth than in the past, with a more
sparing use ofexternal capital.
15. Since slower growth will make it more difficult for the
socialsector to generate additional employment, emphasis is on the
development oflabor intensive activities, including small-scale
enterprises and theincreased use of shift work. Finally, the
reduction of regional disparitiesremains a major objective of
Yugoslavia's economic planning. Financialtransfers between regions
will play an important role in this process, withstress on
encouraging social sector enterprises in the more developed
regions(MDR) to make direct investments in the LDR. The initial
experience withsuch joint ventures is encouraging and a number of
such projects have beenlaunched. They could make a significant
contribution to the overallefficiency of production within the LDR
by facilitating the transfer oftechnological and managerial
know-how within Yugoslavia.
Creditworthiness
16. Traditionally, about three-quarters of the debt contracted
byYugoslavia was provided in convertible currencies through
commercialsources. The bulk of this was in the form of suppliers'
credits, althoughfinancial credits from commercial banks were also
of importance. In responseboth to unsettled conditions in
international capital markets and to thebalance of payments
difficulties faced by Yugoslavia, there was a significantdecline in
commercial financial credits to Yugoslavia after 1980, and
grossmedium- and long-term capital inflows declined sharply from
$4.6 billion in1980 to $2.3 billion in 1982. Total medium and
long-term debt, outstandingand disbursed, is estimated at $16.1
billion at the end of 1982, virtuallyunchanged from 1981, while
short-term debt at end-1982 stood at about $1.7billion. During
1982, there was a substantial decline in foreign exchangereserves,
which at the end of the year amounted to $1.7 billion, or
roughly
-
- 6 -
one month of imports of goods and services. Taking account of
gross workers'remittances, the debt-service ratio averaged 16%
between 1976 and 1981, whilethe debt-service ratio in convertible
currencies averaged 19% over the sameperiod. In 1982 the estimated
aggregate debt service ratio climbed to 22%,reflecting the increase
in interest payments on floating rate debt, and thedecline in
exports. Similarly, the debt service ratio on convertiblecurrency
debt rose to 28% in the same year.
17. In light of the inadequate reserves position, the thin
pipeline offinancial credits, the depleted stocks of imports, the
liquidity problemsencountered by some Yugoslav banks in 1982 and
the consequent unwillingnessof commercial lenders to maintain their
exposure, a major multipartitefinancing effort involving certain
OECD countries, international commercialbanks, the IMF and the BIS
was carried out in 1983 to assist Yugoslavia inmaintaining orderly
debt repayment and to improve its foreign exchangereserve position.
Agreements were reached on a foreign assistance packageamounting to
about $4 billion in gross medium- and long-term commitments andin
the deferment of payment on short- and medium-term principal debt
comingdue in 1983. Agreements in principle have also been reached
between theYugoslav Government and OECD creditor countries and
international commercialbanks for a restructuring of medium-term
principal debt falling due in 1984.The agreements will be
formalized following the approval of the 1984 stand-byagreement
with the IMF. While Yugoslavia's liquidity situation may
remaindifficult in the near-term, both the aggregate and the
convertible currencydebt service ratios should decline somewhat
over the next few years. Givenits past debt servicing record,
pragmatism, and demonstrated capacity toimplement firm
stabilization policies when these are called for, and thecommitment
of the Government to continue doing so in the future,
Yugoslaviaremains creditworthy for a substantial level of Bank
lending.
PART II - BANK GROUP OPERATIONS IN YUGOSLAVIA
18. The proposed loan would be the 84th made to Yugoslavia by
the Banktotalling about $4137.61 million, net of cancellations. 1/
Approximately 32%($1324.04 million) of the total has been for 24
loans in-the transportationsector - 12 for highways, 8 for
railways, 2 for ports, and one each for anatural gas pipeline and
an oil pipeline. In addition to the transportationloans, there have
been seven for power, six for water supply and sewerage,three
multipurpose loans (two of which include substantial
irrigationcomponents), and one for telecommunications. In recent
years, Bank lendinghas increasingly focussed on the agriculture
sector for which 17
1/ The 82nd and 83rd loans to Yugoslavia (Loans 2339-YU and
2340-YU),totalling $7O.O million for the Seventh Industrial Credit
Project, wereapproved by the Executive Directors on July 26,
1983.
-
-7-
loans, totalling about $1034.40 million (25% of the total), have
been made tohelp increase productivity and production. 1/
Twenty-one loans, amounting toabout $535.72 million (about 13% of
the total) have also been made forindustry with the aim of
augmenting overall value added and opportunities foremployment. Two
loans were made for tourism and the first Bank loan for
airpollution control was approved in 1976. A first SAL of $275
million was madeto Yugoslavia in June 1983.
19. Due to the shortage of local funds arising from financial
con-straints, Yugoslavia's disbursement performance deteriorated
somewhat in1981. Following a subsequent implementation review of
the whole loan port-folio with Borrowers, project execution
accelerated. Yugoslavia's performancenow compares favorably with
Bank-wide averages. Annex II contains a summarystatement of Bank
loans and IFC investments as of March 31, 1984.
20. The interrelated objectives which the Bank has pursued
recently inits lending to Yugoslavia are to: (i) expand exports and
improve theefficiency of import substitution; (ii) enhance the
efficiency of domesticinvestment with a view to increasing
production with the more limited invest-ment resources available;
(iii) improve access to capital markets; and(iv) reduce
unemployment, particularly in the LDR. Not every Bank operationcan
address all these objectives nor be entirely oriented towards the
LDR,but a basic thrust of the Bank's activities in Yugoslavia
continues to betoward their development. Given the complexity of
the Yugoslav system(paras. 3-5), however, the process of evolving
acceptable solutions to policyproblems is cumbersome. As a result,
the Bank has been concentrating itslending operations in areas
where its institutional and policy coordinationimpact is expected
to be greater. Accordingly, a shift to more program,sector, and SAP
operations as with the FY83 SAL (Loan 2326-YU), has takenplace to
help consolidate and strengthen policy and institutional
changescritical to Yugoslavia's long-term structural development,
while at the sametime assisting the Government to overcome its
immediate foreign exchangeneeds. In addition to the SAL, SAP
lending to Yugoslavia to date includes asupplemental loan for the
Middle Neretva Project (Loan 1561-1-YU) and reviseddisbursement
percentages for the Tenth and Eleventh Highway Projects
(Loans1678-YU and 1819-YU, respectively), and for the Montenegro
EarthquakeRehabilitation-Port of Bar Project (Loan 1768-YU).
21. A persistent foreign resource gap looms as the major
impediment toYugoslavia's ability to maintain its growth momentum
and to address thecritical issues of unemployment and regional
disparities. The Bank has helpedattract additional sources of
credit through co-financing arrangements andthe establishment of
new banking relationships. The Bank intends to continueemphasizing
co-financing, recognizing, however, the commercial market
con-straints that Yugoslavia is facing. Until then, the Bank is
likely to remainthe principal source of long-term external
capital.
1/ Project Completion Reports (PCR) have been prepared for the
FirstAgricultural Credit Project (1129-YU) and for the Agricultural
IndustriesProject (894-YU).
-
- 8 -
22. Yugoslavia's debt to the Bank in 1982 amounted to about
10.5% ofits total debt outstanding and disbursed and this ratio is
expected to remainfairly stable. Service on Bank loans as a
proportion of total debt servicewas 6.6% in 1982 and is projected
to be about 10% by 1986.
23. IFC started its involvement in Yugoslavia in 1970; since
then, IFChas made 19 investments in the country and, as of
September 30, 1983, IFC'sportfolio amounted to $358.2 million gross
and $172.2 million net of partici-pation and repayments. The basic
objectives of IFC in Yugoslavia are to:(a) assist priority
subsectors in industry and natural resources development;(b)
encourage foreign investment on a joint venture basis; (c) foster
techno-logical transfers; and (d) mobilize other financial
resources in addition toIFC's own funds.
PART III - AGRICULTURAL SECTOR
Role and Performance
24. Agricultural performance during the five-year plan periods
between1961 and 1980 failed to achieve targeted levels, averaging
53% of estimatedgrowth and never exceeding 80% in any five-year
period. 1/ As a result,demand for food products has outstripped
local production and increasingly,food has had to be imported,
particularly wheat, oil crops, protein nutrients,etc., creating
additional demands on the country's scarce foreign
exchangeresources. From 0.6 million tons in 1977, cereal imports
increased to about1.4 million tons in 1980 with wheat and animal
feed accounting for about90%. Agricultural exports declined, with
their share in total export earn-ings dropping from 13% in 1976 to
11% in 1981. During the 1976-80 Planperiod, agriculture grew by
only 2% per annum with crop production only 0.4%against planned
growth of about 5% per annum.
25. For the Plan period 1981-85, the prospects for achieving
projectedgrowth estimates in agriculture appeared no better. The
original plan pro-jected agricultural growth at 4.5% per annum,
with the social sector growingat 6% and the individual sector at
4%. Agricultural exports were projectedto grow at 10% per annum
with imports to decline at 5%. Despite some respitein 1982, with
production increasing 5% over the preceding year, exports haveshown
no improvements and for 1983 the country has already announced
agricul-tural imports of 1.4 million tons. The shortage of
fertilizer has had anadverse affect on agricultural production. As
a result, agricultural growthrates are being revised downwards and
will benceforth be prepared on anannual-plan basis.
1/ The principal lessons from the PCRs referred to in the
footnote on page 7are that greater attention must be focused on (a)
enhancing social sectorenterprise efficiency, and (b) on improving
the productive capacity ofindividual farmers, where the greatest
production potential lies.
-
- 9 -
26. In addition to social sector inefficiencies which the
Governmentplans to address in the context of its Stabilization
Program, one of themajor impediments to a rapid increase in
agricultural production has stemmedfrom the Government's long-term
policy to associate individual farmers intothe cooperative system
in order to organize agricultural production moreefficiently. Such
integration has not progressed as quickly as planned.Accordingly,
at the end of 1982, the social sector held about 19% ofYugoslavia's
arable land, the cooperative farmers only about 36%, and
thenon-contracting individual farmers about 45%, with large
regional variations.In the Republic of Slovenia, for example, the
non-contracting individualfarmers held only 9.7% of arable land
while in the Province of Kosovo theyheld about 78.0%. Nationally,
the estimate is that about 1.2 million of 2.6million farm families
are not contractually associated. In the StabilizationReport,
approved by Government authorities in July, 1983, it is
recognizedthat the process of association has stagnated primarily
as a result of in-appropriate incentives and inept cooperative
management. Traditionalsuspicions towards the social sector in
parts of rural Yugoslavia are diffi-cult to break down and it can
require years before the perceived benefits ofassociation are
accepted.
27. Specific measures to rectify these deficiencies in the
longer-termwill be adopted in the context of the Stabilization
Report recommendations.Since the nature of the association process
will take time however, theGovernment recognizes the need to
realize the agricultural potential ofYugoslavia's non-contracting
individual farmers if in the short-term itintends to meet its
agricultural production targets and improve the country'strade
balance. The disproportion in the allocation of farm inputs
betweenthe social, cooperative and non-contracting individual
farming sectors is afirst area the Government intends to address,
particularly as it relates tothe allocation of inorganic
fertilizers.
Fertilizer Production and Consumption
28. The current 1981-85 Fertilizer Production Plan, in its first
twoyears, failed to achieve its planned targets, mainly due to
foreign exchangeconstraints in importing raw materials for
fertilizer production. In 1983,only 2.6 million tons were produced,
which was the same level as in 1982,against a target of 3.1 million
tons. During 1977-81, domestic consumptionrecorded an annual
increase of about 3% per year. While overall fertilizerconsumption
in the social and cooperative sectors increased, the
quantitiesavailable for the non-contracting individual farmers
declined from 243,000tons in 1977 to 93,000 tons in 1981. In 1982,
only about 50,000 tons offertilizer were made available to them. As
for the social sector, it isgenerally agreed in Yugoslavia that
fertilizer application/ha is adequate andadditional application of
fertilizer would not result in any significantincrease in
production of grain. On the other hand, while the cooperativesector
consumes about 60% of the total fertilizer available for the
domesticmarket, its application rates are below the social sector.
This is alsoreflected in present yields. Additional fertilizer for
this group wouldprovide some increase in yields. The largest
potential increase from
-
- 10 -
additional fertilizer application, however, would be from the
non-contractingindividual farmers. Thus, the critical impact of
increased fertilizer use bythese farmers requires special
recognition at the policy level during thepresent period of
economic stabilization since this represents a
low-cost,quick-yielding means of increasing output--a major
objective of the Stabili-zation Program.
29. Government officials indicated, however, that, due to the
shortageof fertilizer in the country, it suspended in 1983 the past
practice of pro-viding residual fertilizer to non-contracting
individual farmers through theretail shops of trading agencies; the
bulk of the fertilizer is being madeavailable only to the social
and cooperative sectors including associatedfarmers. Failure to
provide fertilizer to non-contracting farmers howeverhas had, and
would, if continued, have serious implications on grain produc-tion
and, in turn, on the Stabilization Program.
Fertilizer Distribution
30. Fertilizer is sold by the producing plants at a fixed price,
toagrokombinats, which usually have some financial interest in
these plants.The agrokombinats act as wholesalers for a specified
geographical area.Those farmers who associate contractually receive
fertilizer from thecooperative village shops or from agrokombinats'
organizations dealing withcontractual farmers for payment in
agricultural produce. Before obtainingthe fertilizer, the farmers
sign a printed contract.
31. At present, the Government relies for all agricultural
inputdistribution on agrokombinats, cooperatives, and to a minor
extent, on theretail shops of Yugoslavia's 29 trading agencies
which continue to marketother agricultural inputs and small tools
on a cash basis. This leads to apolicy favoring the social and
cooperative sectors as agrokombinats/cooperatives have little
interest in assisting farmers unwilling to associatecontractually
with the social sector. This is evident in the case offertilizer
distribution and consumption, where the
distribution/consumptionpattern bears little relationship to either
the distribution of land or grainproduction. At the same time, the
non-contracting farmer has no effectiveaccess to either formal
credit or extension services; his association withthe social or
cooperative sectors is what renders him eligible for
creditconsideration. Thus, the Government's present policy of
inducing cooperationthrough limiting access to credit and inputs
is, in fact, hindering achieve-ment of much greater production in
agriculture.
Fertilizer Producers
32. There are 11 fertilizer producing enterprises located in
fiveRepublics and two Autonomous Provinces. Many of these
facilities wereconstructed 15-20 years ago. Historically, Yugoslav
nitrogen production hasrelied substantially on imports of ammonia,
nitrogen solutions and ammoniumsulphate for further processing into
calcium ammonium nitrate (CAN) andnitrogen-phosphate-potash (NPK)
fertilizers. Between 1975-82, Yugoslavia
-
- 11 -
imported and exported finished nitrogenous fertilizer products,
being a netimporter of urea (25% of urea production) and a net
exporter of NPK (16% ofNPK production). Of the total existing
capacity of 608,000 tons of finishedproducts (CAN, urea, and
NPK/MAP) approximately 177,000 tons of nitrogen pro-duction is
based on imported intermediates. Facilities now under
constructionwould more than double current domestic ammonia
production capacity from457,000 tons to 1,080,000 tons of nitrogen,
and finished nitrogenousfertilizer production capacity from 609,000
tons to 1,186,000 tons by 1987,leaving a deficit of some 105,000
tons of primary nitrogen to be obtainedthrough imports. As for
phosphatic fertilizer, Yugoslavia has traditionallybeen a net
exporter. Present primary phosphate production capacity is546,000
tpy P205 1/ against a finished NPK processing capacity of
314,000tpy P205' With the completion of facilities under
construction, primaryphosphate production capacity would increase
by 1985 to 856,000 tpy P205against a finished processing capacity
of 519,000 tpy P205. Capacityutilization for ammonia and nitrogen
processing plants compare favorably withinternational industry
standards. Capacity utilization for the phosphoricacid industry, as
against an expected industry norm of 90% over the period1970-81,
has averaged approximately 75%. Ammonia production is
almostentirely natural gas based, of which about 40% is imported.
The phosphaticfertilizer industry is based almost entirely on
indigenous sulphur sources.There are no commercial phosphate rock
or potash deposits in Yugoslavia.
33. Fertilizer producers are structured largely along regional
lineswith the development of capacity initiated by the needs of the
Republic/Province in which the enterprise is located. The producers
within eachregion have strong links with agrokombinats or
cooperatives through long-termagreements under which most of the
fertilizer for domestic consumption issold. As a result,
agrokombinats often provide long-term financing forcapacity
expansion, necessary foreign exchange, and on occasion, even
pay-ments to offset losses of the fertilizer enterprises. The
regional basis forcapacity development has worked quite well for
regions with access toregional raw materials (Croatia, Vojvodina,
and Serbia for natural gas;Serbia and Vojvodina for sulphuric
acid). In other areas, however, thedesire for regional
self-sufficiency has tended to distort development.While there is
an elaborate mechanism for providing needed information andoverall
coordination, in practice, investment plans with strong
regionalbacking (including financing) generally pass the various
screening levels.
Production Economics
34. The existing ammonia plants have very high energy
consumption andthis has adversely affected their economics. Indeed
typically, about 85% ofthe production costs in Yugoslav plants are
for energy. As compared to thepresent imported ammonia cost of
about $175 per ton CIF (expected to rise to$255 per ton by 1990, in
1983 prices), the direct economic production costsof ammonia in the
three existing plants range from $246 to $283 per ton
1/ Includes straight phosphate fertilizers.
-
- 12 -
(excluding depreciation, interest and capital charges) with a
weightedaverage of $262 per ton. The newest ammonia plant will have
an economicdirect production cost of about $198 per ton, indicating
that even this plantwill be only marginally economic in the
long-term, and unlikely to generateany meaningful returns on the
original investments. Financially, the cost ismasked by the low
price charged for domestic natural gas. Under SAL I, theGovernment
has agreed to increase these prices to world market levels overthe
next few years. There is nevertheless, a strong likelihood that
most ofthe existing ammonia plants could be economically
rehabilitated, if energyconservation investments were implemented.
As to their downstream ammoniaprocessing units, economic direct
production costs are well below economicbenefits (the import parity
price). Hence, the financing of imports ofammonia and
ammonia-related intermediaries for production of urea and CAN
isjustified on economic grounds. The financing of imports of
phosphate rockfor the existing phosphoric acid production is
economically justified sincethese plants utilize low-cost domestic
sulphur. However, in the case of thenew INA phosphoric acid plant,
based on higher cost imported sulphur, andscheduled to commence
production in 1984, the economics are less favorable.As a result,
the Government has indicated its intention to ensure that,before
phosphate rock is procured from the loan proceeds, fertilizer
plantswill obtain quotations for the supply of phosphoric acid.
Only if processingthe raw materials is more economic than importing
the acid, would the plantimport the phosphate rock and sulphur.
Prices
35. Domestic prices of finished fertilizers have been brought in
linewith world market prices. In 1980, the Federal Government
abolished theprice subsidy for the domestic market and prices were
raised. In January1983, domestic sale prices of urea, CAN and NPK
were raised by 53%, andanother increase of 50% is expected in 1984.
This year's increases will easethe financial situation of the
producers but it is necessary that the presentmechanism for
determining domestic fertilizer prices be continued under
theproposed loan and that the country does not revert to the system
of applyingfederal subsidies for fertilizer (Guarantee Agreement,
Schedule 2, Part B(l)).
Foreign Exchange Requirements/Allocation
36. The shortage of foreign exchange for imports of raw
materials hasbeen a major constraint to increased production. In
1982, to produce about2.6 million tons of fertilizer, the total
foreign exchange requirement wasabout $229 million, of which 60%
was from convertible areas and 40% from CMEAcountries. The total
foreign exchange requirements for imports of spareparts were about
$25 million, of which about 80% was from convertiblecurrency areas.
Until 1982, the major source of foreign exchange for thefertilizer
industry was from export of finished fertilizer and from theexport
revenue of agrokombinats associated with the producers.
Between1977-79, about 11% of the total domestic production was
exported to earnforeign exchange essential for the import of raw
materials. In 1980, whenthe foreign exchange crisis first reached
serious proportions, exports rose
-
- 13 -
to about 20% of total fertilizer production; however, in 1981,
they declinedto about 12%, an indication of the Government's
concern for ensuring domesticavailability. Fertilizer exports
either reduced the quantity available forthe domestic market, or if
exports were reduced to increase domesticfertilizer availability,
the industry failed to obtain the necessary foreignexchange to
import raw materials, resulting in reduced fertilizer
production.Both alternatives adversely affected agricultural
production. The Governmenthas recognized the need to rationalize
the allocation of foreign exchange forthe fertilizer industry in
order to increase domestic production and, inturn, the availability
for domestic consumption.
37. In January 1983, a Social Compact was entered into by the
FederalExecutive Council, the Federal Chamber of Economy and the
Republican/Provincial Executive Councils and Chambers of Economy,
under which 20% of theforeign exchange proceeds from agricultural
exports, excluding meat and fish,is automatically allocated to the
fertilizer industry for the purchase of rawmaterials. It is
expected that this will ensure the availability in 1984 ofabout $50
million in foreign exchange to the fertilizer industry. In
addi-tion, in December 1983, the Federal Government, under its
"Foreign ExchangeAllocation Policy for Priority Items", allocated
$100 million for the importof raw materials for fertilizer
producers and indicated that increasedamounts will be allocated for
1984 and onward, if the foreign exchange diffi-culties continue.
Finally, and most significantly, the Fertilizer Producerswill have,
through Vojvodjanska Banka, access to the foreign exchange
revenuesearned from exports by agricultural Agrokombinats, which in
1983 were esti-mated at US$1.3 billion. After other commitments, up
to US$200 million couldbe available for fertilizer production.
Execution of a Self-Management Agree-ment between Vojvodjanska
Banka, (the Borrower), Agrohemija, the FertilizerProducers and the
Agrokombinats, ensuring that the Borrower has access toadequate
amounts of foreign exchange, would constitute a condition of
Loan
Effectiveness (Loan Agreement, Section 7.01(b)). During
negotiations, it wasagreed upon with the Guarantor that the
fertilizer industry will continue to
receive all of its financing requirements (Guarantee Agreement,
Section 3.06)and that the Borrower will continue to have access to
foreign exchange for
the recycling or roll-over of fertilizer sub-loans until June
30, 1989 (LoanAgreement, Section 5.05).
PART IV - THE LOAN
38. In response to the Government's request for assistance to
thefertilizer sector, the Bank, recognizing the critical importance
offertilizer for the revival of agricultural production, sent a
review missionin January 1983. Appraisal took place in May 1983,
although this was followedby a number of subsequent missions to
resolve outstanding policy issues. TheStaff Appraisal Report No.
4649-YU, dated March 1984, is being distributedseparately. The key
features of the loan are described in the Loan Summaryand in
Section III of Annex III. Negotiations were held in Washington
fromMarch 12 to 20, 1984. The Yugoslav delegation was led by Mr.
BrankoJovanovic, Deputy President of the Federal Committee for
Agriculture.
-
- 14 -
Objective/Concept
39. The loan would assist the Government in increasing the
domesticavailability of finished fertilizer for 1984 and 1985. It
would addresspolicy and institutional issues pertaining to domestic
distribution, byensuring individual farmers accessibility to
incremental fertilizer on a cashbasis without requiring production
or marketing contracts with the socialsector, as well as assisting
the Government in modernizing and rehabilitatingthe industry in the
long run through the financing of technical studies todefine a
program for improving production economics. The loan would
providethe foreign exchange to import raw materials and spare parts
for the produc-tion of the incremental consumption requirements,
estimated to increase by15% per annum in 1984 and 1985 for a total
of 850,000 tons. Of this, about680,000 tons, would be made
available for sale through the retail shops ofparticipating trading
agencies to individual farmers for cash. This amounthas been
derived taking into consideration the relative fertilizer needs
ofthe social sector, the cooperatives and the non-contracting
individualfarmers. The increased application of fertilizer by these
farmers wouldyield the optimum results in the immediate future. The
balance will be usedin the cooperative sector, where the increased
application is economicallyjustified.
Description
40. The loan is designed to finance foreign exchange
requirements forincremental imports only and would include the
following: (a) Sub-loans tofertilizer producers for raw materials;
phosphate rock, intermediates suchas MAP, DAP, ammonia and ammonia
solution for incremental production esti-mated at 0.85 million tons
of finished fertilizer; and for critical spareparts and essential
catalysts; major items would be corrosion-resistantmaterials for
sulphuric and phosphoric acid plants, stainless steel pipingand
catalysts for ammonia production; (b) sub-loans to fertilizer
producersfor technical and energy studies of fertilizer plants to
assess their operat-ing and energy efficiency and identify measures
and investments to reducecosts.
Cost Estimates
41. The loan represents the convertible foreign exchange
requirementsfor incremental domestic production in 1984 and
1985--US$57.2 million for rawmaterial, US$21.0 million for spare
parts, US$1.72 million for studies, andUS$9.8 million for price
contingencies. The cost of consultants is based onan estimated
requirement of 190 man months comprising about 110 man
monthsprovided by foreign consultants, at a total cost of $12,000
per man month,and 80 man months provided by local consultants at a
total cost of $5,000 perman month. Cost estimates are based on
March 1984 prices. Price contingen-cies for raw materials have been
calculated on the basis of projected inter-national inflation rates
for fertilizer raw materials of 9.8% in 1984 and in1985, while
price contingencies for spare parts and consultants services
havebeen calculated on the basis of projected international
inflation rates of3.3% in 1984 and 8% in 1985. The front end fee on
the Bank's loan wouldamount to $224,439 and would be
capitalized.
-
- 15 -
Procurement and Disbursement
42. ICB would be used for raw materials and spare parts, except
forthose items of a value equivalent to $100,000 or less per
contract, whichwould be procured following bids from at least three
qualified supplierseligible under the Bank's Guidelines, and for
proprietary spare parts agreedwith the Bank which may be procured
through direct negotiation with suppliers.The aggregate of such
contracts would not exceed the equivalent of $8.0million.
Consultants services to be financed under the loan would be
procuredin accordance with the Bank's Guidelines for the Use of
Consultants. Localconsultants may form joint ventures with foreign
companies to carry out theenergy studies. Procurement of all
fertilizer raw materials would be coordi-nated by Agrohemija, the
Business Community of Fertilizer Producers, so thatthe benefits of
bulk purchases would be achieved for the same materialsrequired by
more than one fertilizer company. Procurement of spare partswould
be made via the purchasing department of the relevant fertilizer
com-panies under the supervision of Vojvodjanska Banka to ensure
that Bank pro-
curement Guidelines are adhered to.
43. The loan is to be disbursed over two Bank fiscal years
(FY85-FY86),starting in the first quarter of FY85. Since items to
be financed by theLoan are all quick disbursing, the disbursement
profile is not typical. Thefirst tranche would total $50.00
million. The second tranche, would consistof about $40.00 million.
The release of the Second Tranche, about June 1985,would cover the
period July to December 1985 (see para. 56). Disbursementrequests
would be supported by full documentation.
The Borrower
44. The Vojvodjanska Banka - Udruzena Banka has been selected by
theGovernment as the Borrower under the loan. Because of its
involvement inpast Bank credit projects, it is conversant with the
Bank's requirements, hasa nucleus of trained staff able to
undertake appraisal and supervision, andhas gained experience in
implementing nationwide projects. Vojvodjanska
Banka, an apex bank, consists of sixteen basic banks and has its
headquartersin Novi Sad in the Socialist Autonomous Province of
Vojvodina. Appraisal andsupervision of sub-borrowers would be
undertaken by the Borrower's ForeignOperations Department, which by
September 1, 1984 would hire an additionalappraisal officer to
handle the proposed loan matters (Loan Agreement,Schedule 5, Part
A). The financial position of Vojvodjanska Banka is satis-factory
and is being closely monitored by the Bank in connection with
theexisting credit projects (Loans 1129-YU, 1801-YU and
1477-YU).
On-Lending Procedures, Terms and Conditions
45. The eleven fertilizer producers would submit loan
applications tothe Borrower through its basic banks. The proposed
Loan proceeds, whichwould be channeled to Vojvodjanska Banka, would
be on-lent to the fertilizercompanies in accordance with lending
procedures and terms and conditions
satisfactory to the Bank (Loan Agreement, Section 3.02(a) and
(b) andSchedule 5). In order to avoid duplication of work and to
speed up sub-loan
-
- 16 -
approval, Vojvodjanska Banka would appraise each sub-borrower
and prepare anappraisal report. The Borrower would ensure (Loan
Agreement, Schedule 5)that:
(a) management, organizational and production facilities
ofsub-borrowers are appropriate for the timely production
offertilizer;
(b) sub-borrowers generate sufficient cash flow to cover
debtservice, local claims and appropriate investment levels;
(c) documents and clearances necessary for foreign
exchangelending are obtained by the sub-borrowers, the basic banks
andRepublican/Provincial authorities and/or Federal
authorities;
(d) sub-borrowers have the Yugoslav Social Accounting
Service(SDK) prepare and audit the income statement, statement
ofchanges in financial position and balance sheet, in
accordancewith generally accepted accounting principles and submit
themto the Borrower at the end of each fiscal year.
46. Sub-borrowers would receive the loan funds in foreign
exchange, butthey would repay Vojvodjanska Banka in Dinars at the
exchange rate prevailingat the time of repayment. The Borrower
would then convert the Dinars intodollars from the sources of
foreign exchange described in para. 37. Theduration of sub-loans
for raw materials and spare parts should not exceed 12months; and
for technical studies four years, with one year grace period.Funds
would be on-lent at the same rate as that charged by the Bank, plus
aspread of about 1% to cover administrative costs. This is
considered anacceptable rate of interest given that the
sub-borrowers would bear theforeign exchange risk.
Technical and Energy Studies
47. An assurance was obtained from the borrower that it would
requireconcerned fertilizer producers to complete the studies, in
accordance withthe terms of reference finalized during
negotiations, by March 31, 1986 andfrom Agrohemija, that the
results of these studies would be reviewed with theBank (Project
Agreement, Section 2.06 and Loan Agreement, Schedule 5, Part
B,Para. 6(c)). The proceeds from the loan for these studies would
be on-lentto the fertilizer producers by the Borrower in
consultation with Agrohemijaunder terms of an agreement between the
Borrower, Agrohemia and the 11fertilizer producers. Execution of
such an agreement would be a condition ofeffectiveness for the
proposed loan (Loan Agreement, Section 7.01(a)). Basedon the
findings of the technical and energy studies, a plan of action
wouldbe prepared by December 31, 1986, outlining the investment and
other measuresrequired to rehabilitate the fertilizer production
units in order to placethem on a sound economic footing (Project
Agreement, Section 2.06).
48. Agrohemija would also be responsible for the selection
ofconsultants and the coordination of technical studies, the
monitoring offertilizer production and distribution, and for
assisting the Borrower in the
-
- 17 -
supervision of procurement of raw materials and spare parts. A
ProjectImplementation Working Group would be established in
Agrohemija to organizeand coordinate the technical studies. The
terms of reference for the studies
and the scope of work for the group were established during
negotiations.The establishment and staffing of such a Group would
be a condition for loaneffectiveness (Loan Agreement, Section
7.01(c)). At the Federal level, aLoan Implementation Committee
would be established (Guarantee Agreement,Section 3.05). The
Committee would consist of representatives of the FederalCommittee
for Agriculture, the Federal Secretariat for Finance, the
FederalSecretariat for Markets and General Economics, the Federal
Chamber ofEconomy, Agrohemija and Vojvodjanska Banka. The Committee
which wouldcoordinate different aspects of loan implementation
would be chaired by theDeputy President of the Federal Committee
for Agriculture and VojvodjanskaBanka would serve as a
Secretariat.
Monitoring/Reporting
49. Agrohemija would be responsible for monitoring and reporting
on theplanned production and distribution targets and the technical
studies(Project Agreement, Section 2.03(a)(iii)). In monitoring
fertilizer produc-
tion and distribution, Agrohemia, in close cooperation with
participatingtrading agencies, would report, on a periodic basis,
the progress made inachieving the plarned targets, with
distribution broken down by social andcooperative sectors and
farmers buying on a cash basis, by fall and springseasons, and by
Republics and Provinces. Based on the existing system forrecording
fertilizer sales, monitoring can be readily undertaken to
determinequantities sold to non-contracting individual farmers.
Agrohemija wouldsubmit these reports to the Borrower, which, after
careful review, wouldforward them to the Bank within 30 days after
the end of the period.Progress reports on the general execution of
the project and on the studieswould be submitted to the Bank on a
quarterly basis within thirty days afterthe quarter concerned (Loan
Agreement, Section 3.03).
Accounts and Audits
50. The Borrower would maintain a separate account for sub-loan
dis-bursements and other expenditures under the Loan (Loan
Agreement, Section5.01). It would have its accounts and financial
statements (balance sheets,statement of income and expenditures and
related statements) for each fiscalyear audited in accordance with
appropriate auditing procedures consistentlyapplied by the Yugoslav
Social Accounting Service, an independent auditingorganization
acceptable to the Bank. The Borrower would furnish to the Bank,not
later than six months after the end of each fiscal year, certified
copiesof its financial statements audited as above and the report
of the SocialAccounting Service (Loan Agreement, Section 5.02).
Marketing Arrangements
51. The incremental fertilizer production financed under the
loan wouldbe distributed by agrokombinats, cooperatives and trading
agencies. A totalof 680,000 tons, equivalent to 80X of the
incremental fertilizer domestically
-
- 18 -
available in 1984 and 1985, would be made available to
individual farmers ona cash basis through the retail shops of the
trading agencies. A self-management agreement between the Borrower,
Agrohemija and the fertilizerproducers would make available the
agreed quantities of fertilizer in 1984and 1985 to the
participating trading agencies for sale on a cash basis
andexecution of this SMA would be a condition of Loan Effectiveness
(Loan Agree-ment, 7.01(a)). About 170,000 tons, equivalent to 20%
of the incrementalfertilizer production, would be sold to the
cooperative sector for applica-tion. During negotiations, domestic
fertilizer production targets for 1984and 1985 and domestic
consumption targets for 1984 to 1989 were agreed towith the
Guarantor and assurances were obtained that the Guarantor would
takeall steps necessary to achieve these targets and to ensure that
the abovedistribution would be followed (Guarantee Agreement,
Section 3.04 andSchedule 2). This agreement on distribution ensures
that fertilizer will notbe exported until the fertilizer
requirements of the domestic market aremet. An understanding was
also obtained from the Guarantor that the futuredomestic fertilizer
distribution system would be determined in accordancewith the
recommendations of the scientific and research services
inYugoslavia and on the basis of soil fertility needs for different
crops, inorder to optimize fertilizer utilization.
Economic Justification and Benefits
52. The proposed loan would assist Yugoslavia to increase the
avail-ability of fertilizer to the domestic market, resulting in a
total incre-mental production of 0.85 million tons of fertilizer
for domestic application,which should permit an increase in grain
production of about 1.3 milliontons, mainly of wheat and maize, in
the shortest possible time - an importantobjective of the
Government's Stabilization Program.
53. Of the estimated total incremental grain production (about
1.3million tons), wheat would constitute about 80% (1.0 million
tons) and maizethe remainder. The increased wheat production, in
particular, would assistthe country in reducing wheat imports
which, in the past three years, haveaveraged about 0.8 million tons
annually. The expected additional maizeproduction would enable
exports to both Eastern Europe and convertiblecurrency countries to
be increased. Both of these items together wouldresult in foreign
exchange resources of about $208.0 million.
54. The major beneficiaries of the loan would be
non-contractingindividual farmers (about 1.2 million farm families
presently without officialaccess to fertilizer) and the fertilizer
producers. Even with a modestincrease in their present fertilizer
application, the incomes of suchfamilies would increase by about
Din 4,000/ha or about Din 12,000 ($100)since, on average, each
non-contracting farm family owns about 4 ha of whichabout 3 ha are
under grain production. The present value of net benefitsdiscounted
at 16% and 20% would be Din 3,660 and Din 3,000 respectively.Both
these returns are fully satisfactory.
55. There are several major areas of risk inherent in this type
of loan:
Foreign Exchange: Although the Bank would assist the country
overa twc year period in meeting foreign exchange requirements
for
-
- 19 -
increased domestic availability of fertilizer, unless the
necessaryforeign exchange were to continue to be made available to
thefertilizer industry thereafter, the situation could again revert
to
the present one. As stated in paras 36 and 37, however,
theGuarantor has agreed to take all steps necessary to ensure
theachievement of revised domestic production targets for 1984-85
andconsumption targets for 1984-89; an appropriate mechanism would
be
set up whereby the Borrower would continue to have access
toforeign exchange for fertilizer sub-loans until June 30,
1989.
Distribution: While there is no guarantee that the
fertilizerdistribution arrangements would be continued in the
post-loanperiod, sustaining the operation of an effective
distributionsystem for agricultural inputs would be one of the
major issuesaddressed in a possible second SAL. In addition, an
understandingwas obtained during negotiations that future domestic
fertilizerdistribution would be based on soil fertility needs for
different
crops so as to optimize fertilizer utilization.
Non-Contracting Individual Farmers; It is possible that
individual
farmers may not purchase fertilizer on a cash basis
asanticipated. Based on discussions and statistical
information,however, this risk is low since these farmers are well
aware of theeconomic benefits of fertilizer application.
Rehabilitation: The restructuring of the fertilizer industry, as
aresult of the technical and energy studies of fertilizer
plantsunder the proposed loan, could have social implications.
Forexample, uneconomic units might have to be closed down.
Thefertilizer industry is capital-intensive, however, and
theunemployment consequences of any shutdowns would be
minimal.Furthermore, the Government recognizes the importance
ofrationalizing fertilizer production and its decision to
borrowunder the proposed loan, for financing such a study, is
an
indication of its serious intent.
Weather Conditions: The benefits of increased
fertilizerapplication are very much dependent upon weather
conditions. Theshort time period involved in the loan and the
urgent need toincrease grain production render weather conditions
of specialconcern. No policy precautions can be taken in this
regard,however.
PART V - LEGAL INSTRUMENTS AND AUTHORITY
56. The draft Loan Agreement between the Bank and Vojvodjanska
Banka-
Udruzena Banka, the draft Project Agreement between the Bank and
Poslovna
Zajednica Proizvodjaca Vestackih Djubriva Jugoslavije
"Agrohemija" - Beograd,the draft Guarantee Agreement between the
Socialist Federal Republic ofYugoslavia and the Bank, and the
Report of the Committee provided for in
Article III, Section 4(iii), of the Articles of Agreement of the
Bank, are
-
- 20 -
being distributed to the Executive Directors separately. Special
conditionsof the loan are listed in Section III of Annex III.
Special conditions ofeffectiveness for the proposed loan (Loan
Agreement, Section 7.01) are that:
(i) the agreement between the Borrower, Agrohemija, and the
elevenfertilizer producers concerning implementation of the
technicalstudies, availability of fertilizer to the trading
agencies and thepreparation of periodic reports on the fertilizer
sold throughretail shops has been duly executed;
(ii) the agreement between the Borrower, Agrohemija, the
fertilizerproducers and the agricultural agrokombinats ensuring the
Borrower'saccess to foreign exchange has been duly executed;
and
(iii) the Project Implementation Working Group has been
established andstaff appointed thereto, on terms and conditions
satisfactory to theBank.
Special conditions of disbursement of the second tranche of the
proposed loan(Loan Agreement, Schedule 1, Para. 4, and Guarantee
Agreement, Section 3.03and Schedule 1) are that:
(i) about 1.5 million tons of fertilizer have been made
available forthe domestic market in the fall of 1984 and about 1.7
million tonsmade available for the domestic market in the spring of
1985;
(ii) about 240,000 tons of fertilizer have been made available
to thetrading agencies for sale, on a cash basis, to individual
farmersfor the fall 1984 and about 200,000 tons for spring 1985;
and
(iii) adequate progress has been made in carrying out the
technical andenergy studies.
57. I am satisfied that the proposed loan would comply with
theArticles of Agreement of the Bank.
PART VI - RECOMMENDATIONS
58. I recommend that the Executive Directors approve the
proposed loan.
A. W. ClausenPresident
AttachmentsApril 13, 1984Washington, D.C.
-
-21- ANNEX IPage 1 of 6
YUGOSLAVIA - SOCIAL INDICATORS DATA SHEETYUGOSLAVIA REFERENCE
GROUPS (WEIGHTED AVERAGES) /a
MOST (MOST RECENT ESTIMATE) /bRECENT lb MIDDLE INCOME
INDUSTRIAL
196OZ/b 1970-b ESTIMATE-b EUROPE MARKET ECONOMIESAREA (THOUSAND
SQ. N)
TOTAL 255.8 255.8 255.8AGRICULTURAL 148.2 146.3 142.9
GNP PER CAPITA (US$) 380.0 820.0 2790.0 2453.6 11112.7
ENERGY CONSUNPTION PER CAPTTA(KILOGRAMS OF COAL EQUIVALENT)
858.0 1558.0 2402.0 1580.8 7500.6
POPULATION AND VITAL STATISTICSPOPULATION,ttID-YEAR (THOUSANDS)
18402.0 20371.0 22516.0URBAN POPULATION (X OF TOTAL) 27.9 34.8 43.1
47.8 78.2
POPULATION PROJECTIONSPOPULATION IN YEAR 2000 (MILL)
25.8STATIONARY POPULATION (MILL) 30.0YEAR STATIONARY POP. REACHED
2070
POPULATION DENSITYPER SQ. EM. 71.9 79.6 87.3 82.0 139.0PER SQ.
KM. AGRI. LAND 124.2 139.3 156.4 157.2 514.2
POPULATION AGE STRUCTURE (Y)0-14 YRS 30.5 27.4 24.5 31.9
22.4
15-64 YRS 63.2 64.8 66.7 60.9 66.065 AND ABOVE 6.3 7.8 8.8 7.2
11.6
POPULATION GROWTH RATE (Z)TOTAL 1.2 1.0 0.9 1.6 0.8URBAN 3.6 3.2
2.9 3.4 1.4
CRUDE BIRTH RATE (PER THOUS) 23.5 17.8 16.7 25.0 13.8CRUDE DEATH
RATE (PER THOUS) 9.9 8.9 9.0 9.1 8.9GROSS REPRODUCTION RATE 1.4 1.3
1.1 1.7 0.9
FAMILY PLANNINGACCEPTORS, ANNUAL (TilOUS)USERS (X OF MARRIED
WOMEN) .. 59.0
FOOD AND NUTRITIONINDEX OF FOOD PROD. PER CAPITA(1969-71=100)
85.0 93.0 117.0 108.4 112.4
PER CAPITA SUPPLY OFCALORIES (7 OF REQUIREMENTS) 128.0 130.0
140.0 129.6 134.4PROTEINS (GRAMS PER DAY) 95.0 93.0 101.0 92.3
99.0OF WHICH ANIMAL AND PULSE 29.0 32.0 39.0/c 34.6 61.4
CHILD (AGES 1-4) DEATH RATE 11.2 4.b 1.8 10.4 0.4
HEALTHLIFE EXPECT. AT BIRTH (YEARS) 63.2 66.7 70.8 67.2
74.9INFANT MORT. RATE (PER THOUS) 91.9 55.5 30.6 71.4 10.7
ACCESS TO SAFE WATER (%POP)TOTAL .. 33.6/dURBAN 42.4/d
62.07..RURAL *- 12.37..
ACCESS TO EXCRETA DISPOSAL(% OF POPULATION)
TOTAL .. ..
URBAN .. ..
RURAL .. ..
POPULATION PER PHYSICIAN 1620.0 1000.0 680.0 1094.8 553.6POP.
PER NURSING PERSON 630.0/e 410.0 280.0 762.5 182.9POP. PER HOSPITAL
BED
TOTAL 200.0 180.0 170.0/f 334.0 119.8URBAN 90.0/e 100.0 100.071
216.0 143.2RURAL 1040.0/e 1600.0 1840.07..
ADMISSIONS PER HOSPITAL BED .. 17.3 18.2/f 20.0 17.7
HOUSINGAVERAGE SIZE OF HOUSEHOLD
TOTAL -4.0 3.8 3.8/fURBAN 3.3 3.2 3.3/f.RURAL 4.4 4.3 4.17.
AVERAGE NO. OF PERSONS/ROOMTOTAL 1.6 1.4URBAN 1.7 1.3RURAL 1.5
1.5
ACCESS TO ELECT. (% OF DWELLINGS)TOTAL 54.5 87.9URBAN 92.7
98.4RURAL 36.1 80.1
_________ -________________ __ __ __ ---------------------
----------
-
- 2 2 - ANNEX IPage 2 of 6
YUGOSLAVIA - SOCIAL INDICATORS DATA SHEETYUGOSLAVIA REFERENCE
GROUPS (WEIGHTED AVERAGS) /a
MOST (MST RECENT ESTIMATE) lb/b /b RECENT lb MIDDLE INCOME
INDUSTRIAL
1960L-=- 197W0- ESTIMAT-b EUROPE MABRET ECONOMIES
EDUCATIONADJUSTED ENROLLMENT RATIOS
PRIMARY: TOTAL 111.0 106.0 99.0 102.2 101.5MALE 113.0 108.0
100.0 107.2 103.3FEHALE 108.0 104.0 98.0 97.9 103.3
SECONDARY: TOTAL 58.0 63.0 83.0 56.5 89.2MALE 63.0 68.0 86.0
63.4 84.5FEMALE 53.0 58.0 80.0 48.9 86.0
VOCATIONAL (% OF SECONDARY) .. 26.4 24.2 22.4 18.3
PUPIL-TEACHER RATIOPRIMARY 33.0 27.0 24.0 24.7 20.2SECONDARY
13.0 22.0 18.0 22.1 14.4
ADULT LITERACY RATE (%) 76.5 83.5 85.0/g 69.7 98.9
CONSUMPTIONPASSENGER CARS/THOUSAND POP 3.0 35.4 84.7/h 52.9
356.5RADIO RECEIVERS/THOUSAND POP 84.9 165.9 207.4 165.5 1085.4TV
RECEIVERS/THOUSAND POP 1.4 88.3 192.4 124.2 449.5NEWSPAPER ("DAILY
GENERAL
INTEREST") CIRCULATIONPER THOUSAND POPULATION 70.3 85.3 103.0
96.3 331.3
CINEMA ANNUAL ATTENDANCE/CAPITA 7.1 4.5 3.5 2.9 3.5
LABOR FORCETOTAL LABOR FORCE (THOUS) 8302.0 8838.0/i
9485.0/i
FEMALE (PERCENT) 3 5.0 35.9 36.1 34.5 36.1AGRICULTURE (PERCENT)
63.0 51.0 29.0 40.7 6.2INDUSTRY (PERCENT) 18.0 23.0 35.0 23.4
37.8
PARTICIPATION RATE (PERCENT)TOTAL 45.1 43.4 42.1 42.0 45.5MALE
60.0 56.6 54.6 55.2 59.0FEMALE 30.9 30.6 30.0 29.1 32.5
ECONOMIC DEPENDENCY RATIO 0.8 0.8 0.8 0.9 0.8
INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY
HIGHEST 5% OF HOUSEHOLDS 16.4/ 15.1/k 13.1/bHIGHEST 20% OF
HOUSEHOLDS 41.571 38.77. 43.1LOWEST 20% OF HOUSEHOLDS 6.97/ 6.67k
6.67b .. 5.5LOWEST 40% OF HOUSEHOLDS 19.0 h 18.47k 18.771 ..
16.5
POVERTY TARGET GROUPSESTIMATED ABSOLUTE POVERTY INCOMELEVEL (US$
PER CAPITA)
URBAN ..RURAL ..
ESTIMATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)
URBAN ..RURAL .. .. 530.0 409.0.
ESTIMATED POP. BELOW ABSOLUTEPOVERTY INCOME LEVEL (1)
URBAN .. ..RURAL ..
NOT AVAILABLENOT APPLICABLE
N O T E S
/a The group averages for each indicator are population-weighted
arithmetic means. Coverage of countries among theindicators depends
on availability of data and is not uniform.
/b Unless otherwise noted, "Data for 1960" refer to any year
between 1959 and 1961; "Data for 1970" between 1969 and1971; and
data for "Most Recent Estimate" between 1979 and 1981.
/c 1977; /d Percent of occupied housing units with piped water;
/e 1962; /f 1976; /g 1975; /h 1978; /I Includingmigrant workers
abroad; 7] 1963; Ik 1968.
Nay 1983
-
- 23 - ANNEX I
Page 3 of 6DEFINITIONS OF SOCIAL iIlICATtOR
Notes: Although the data are dra- from atorcee generaiiy judged
the most eohrtsiead reliable, it should else be oe htte a ech
eessoaicomparable becaus oftelc :feadardled defiuditouu atd
cutoe.pus ued by different uotrieo it coltlgthe data. The Is na
ar,eethb ,usfltdesribe orders of _ngottadr, ld Ict treds,ad
icaacele tertait saJ.e doff-eroca he-ee
The reference. ators. are (1) ube ea- c-coy groop of,t .b s..j..
uon. tryae III acotr igop ah eumeehat higher aoerge irome thee the
-Iotry group of thessbjectto....try (eacept foe eHigh Icotee" Oil
Exportes gruspehere "Middle, ...os Norh Aftric aud Middle aEt"' Is
tbesen he.a..e ofstograe-eiuOf flttle) the eefceec greet data the
--ergoa ae popolatite teighted arilheett s.ans for each udacesur
sod shee otly oboe aajrity ef she.. tslel_a is group .e data foe
cha ludcator iore the rocerage of coent,t Ie....egthidtsesepnsu the
tealtabilityp of data aIdisetaI-om attemm haetarised it r-laclg
e-ragea of ete indicator to oete.These an-rges are eelp usfu
rtopariOg the ae eeldctre asm me h aer n
dEA (thousan d sek.lBreaie e habis-Paaatt dinaded by tuahr of
prsatstlsgTousi - To ta1 aurfate urea cmPriabeg latd are atd Inlaud
oseore; 1960, phaIosqaiidto a d eital school attin yaa.
Agei-Iltn-1 - CEtieate of aittolorea teed temporarily
orpraosytleedfml rduate .. ...es aslta.tte-ds prby ca - esee nf9or
crop, ptua, aket.. aolth.nhe gardena or to Ie. falt;lh,ttln.ti
ate
190ad 180 dae PePo1atien Pee 11uspata1 ted - etatl, aeham, aed
rural - Pepalatle festurhac, cod eara1)ditieded hy the icreaeuia
obeg of bepital beds
GNP PIt CaPITA (US$) -GNP per papita etareta ortee.t sarht
prices, a_itablein alcalpleegeeladaeiledhsIa cellte h
sur1ouaricomehoba Worlid moat atlas(19 79-ti hasis); rbliteieuoes d
ptasaeenblamsspeasei tfe
iMbO, 1978, aud 198k dote,by at lea toet hscie sshihets pr-idlog
prtett,ally catedla1
;. -I "' " _l-, 1, "I ~ ~ ~ ~ ~ ~ ~ ~~~cae rcou acided. RunaI
hospItals , hreas'r,ibuelodehatanprimay" etrgy (coal and
_iet,ptoom,etrlgealhyt- ula sistanrt, trse lef,nt)eitofe epseg ndsa
n
audIachrml leticity) i klgoeof cue1
equlcaleetd par.- cait; enie htedrag of---I e -ffca failtis Per
bytl s purposes* tObO~~~~~~~~16, 1970, oud1980 date..P,orba;""t
hsIta. itu fd.;b riclulgecr. ad cra
.. d ~~~~~~~~~~~~~~~~ ~epleald, local ur rota bupti ndmdclan
aentytsesyPOPLAIOTN gap VITAL STATISTICS ipceh.dheptl arelecode
tely tdela1 toa.d ttr
Todtal ropolatloo, Mad-Year (thocoando) - Au cf JuLy 1; 1960,
1970, aod 1981 adm.issious pet taitel~ ted. ITlsdd u.mhe Oof dmsosn
rdahr
dots, fromftoa) bBtoosp-1...I.italo dinided by the n-oabr of
beds'
dltfereot dfo-iu o raora ma yffect otmyaoability of dsa
t.11AOmog otories; 1960, 1970, etd 19f1 data HOUSNGaole Olotbl
cttsprhaead oa.ohe aa
Peuale1rujecftio- -to -- 1to r Al htehl ofcouit ofI aPr. groa
hof ..i.ml teceslolgqsaMNtatalpooatt byaotd aseaud their .. e. it'
n fertility. the Su bid o tutthlpaps
oae.Projetio prtaaa o mrale rtes aprie ufthre ecgthmeir f eroa
utrom-iotl eren adrualsotganubrtrlerela ..e.io lieePctatoy at birth
ioceaaog ith cuferp pr o hpeson per room tnalahn
ndttlocpedceetaa
peart. Te parameers foe fertility ltotylobo he ed otocu, a
tieporte. ~. . o yRo -f .di
euruttattemattscessatt. his is ahIeved tip afterfootilttray eaI
(j ,-te fooperet hatldrues -, _laclie tuthe rpiatmaut evelof omt ne
roendttlo rats, thee Pimar soe p-itta,y male and female - d --oloal
mal atIeml
~~~~~fertility rae-o oydeeotle .
coutr.s...ba.neealsdaatouer-dmet ayteced 08pelysTear otatiunary
popeloElnish teathy -. the. year .. obet sntofary sinc 000ppl
aehlsorbe htofii colaa
popoi-lsuem att til Yhrechd.f lecoudyary dofooopr- total,. male
an fate omutd saeg;ecsdrPoeolaticu et.lty --- ctil...oIqoircat eat
oo yar o aptoa rmr imrttfar t. he.- Mtdytar opulaIon er oqare klo
meer (50 hecaree of ponide gemeal, rnataual, r
tepberttalui_tloitarthaa fetotal aea; 190, 197, aud 980 daa.
puplot1 ealb.. of ID tu. 17yer ofago orapod:c oss e
Per- lb. e.borce ni. loud t- opoed-a ahece I forafOcitre lan
gtergi eeeduuly; 1968, 1970 oud1980 data. Vucatitel eerollaeet
(perceu of secoedIry).d Voatiotal lestisAtlOa
po ai t; 16, 1970, an pd1981 data _-. To.Pli-l-tacbee etl -
priary and fs.t.ooda ry-Toa seed ents en -tle .I
fopotte rothe tapol.tporcnc - toha -. i aona gth raho of u:rha
Mol llerc rate (pretI ieat dsu(bet ra n rt)a
pose pupuluotoc; 1981, 1970, and 190of1p data. -tol_, Cl It 5
P',9el tIgg
Items Ieruluctle tate-Intage touer of doghuereaoman til
hearftoPilitaryahlflas
PaY- plunmadcopcOos.At- t (tohad) ..ta tIbre cpots ts u , ItIfet
aafercc ee a no-ty he .topaaie. fi_msprogram YT - btei tr (ret- th
orau ptiatuff T ec er oe-uaosI
PaiyP'utu-sr preto ate aeo 'reoaeo re eea pi sc e thuad
puuitiun; enciod ..m toiemd Treeler
oilmarIedtono n tneaaeorcp. eacacq.lrceateniperthntad yputsto)
Oho-thearoagff1ahtTITO lclcaeo 'ol geea ..aetoasao" letC toe d
basay.....diay
at 1960odcte 1970 all fed19uiit,Pnotoe edoedtdt e0dIy fIrapasa
eo fu ieaek
cuff e a196tea artItac ) agrgte~ benocio fof eriach r coonor is
mo 11hle2to17Feults,ge f
1970e ottoa aesrae prd Pce prcoogt;1r-h,17.ad18dats. IAO980dDt
I_P0-P0CCe .u..Po ata Supplofcalries(cctofreimea9-Cptd fret Total
Iabo Fore thedad)-ltetslyatv eeus mid re
oPePlrts, ae 60egr It7 stock Net -aple emulueoranmai fed,
oe,tma-b 196, 1970 ll and 1 th81 data. _. d
age al teadistrhotia of ppuistot, o a grom hng 1 pretfor tst
idosry(pttet)- I.aht ..e .it yitin, Tron ttosim,mseat aem
- palse peoteto, of ahlcb9--6 O 190 7, grat shoe 7 he1 atslpoes
heeib,17,tdl91dt.Teeartee n10sutoptt as.tada ith a t arc lsrta tho
of 75grm ofrtota pereteh e 3gem e et agt -ast ttntr oftepplto,an5 e
Ietea
Thrd96ri 0Pe lonp 91h,17 e 1 980 dta. -cetodc Oajdenr dait
RatopOefi p gaate ne 5 n 1sd crI
deetoed fro ePutoal .. -du90 n17,ed 198lado to ras e
day;t1981-k, 197 a...d. 1977Hdata. IttClef~~~~~~~or DIIatTotChild
age 1-b) eathtate (per t.. nsatd) f tldah o tdonatd On I -c-illeebo
I p:riothe e Incme letranoathp.and bled)-IiIe b ihs
ag 'r I - er,c bire ntI g tOifema dvlpo eto,rcotD perroeriget,P
-porst prOdeoeen ted potat O aree e
year ofage perkhousau hoe hiths; 190, 1978ted 198 data.
bsulotepct. etpioctiett nei isthen" IttI'd ienl belteallah
aoioldaAfccia of oft lWater ..rce of unath-o")- total urban, aofoa
-po t rreoal dqaeditpa ueta o-fn euemtai o
matr Oppl (ooodt rate outac ..et or autreated ot,Isimtegtlaffv
teverty -to - local (It ret cata .- ar.blt ndrJ e
sanitary tells) at P'reae of ther reptle-O popolaItousf. It at
peoratupbli isom u he- toPu1tirp. Oe lvlisTindfuete oafrm . oaema h
uciacIftbeo eIdhtb eatoutahie acuass of that fTVRtmared (Perlta eo
booePvry noelvl(aes rehaua. I- rurlaesrttabeacaeol Implyj that the
i buetfeo.n rua - Prtotof. pop palee (rh_ and rurl)th are abml
Id",ersro the hoi-holl do ot-have-i apend a idproplrito..e
pusTof poe
indexO lay~ in fecigOefmly etrtnstoa- d-hrofpti-s (tutr , rbe,
a....a.)sered ysoreelispooalio pepcennagsu of their ocepectira
pop~~~~~~odaen. O . ractot dieposadi
ma tPtuleth colttiu ao dipoal,oit o--ibou t-ateet.o OtaItoc aol
Mota The pstn ridohu-adecoI aloaceeca h-ete-Pretyteaorth11aofpO cot
mcaclylsad eaethsdipataaprities and siollar Iosoailauiotno .
dOfifaitp 1903t
-
- 24 -
ANNEX IPage 4 of 6
YUGOSLAVIA - ECONOMIC INDICATORS
Population: 22.7 million (mid-1982)GNP Per Capita: USi2,840
(1982)
Amount Annual Growth Rates (1)(million US$ at (at constant
prices)
nIditcator current prices) Actual Projected1981 1978 1979 1980
1981 1982 1983 c/ 1984 1985 1986 1987 1988
NATIONAL ACCOUNTSGrDoss domestic product a/ 68,005 8.5 4.2 2.3
1.4 0.8 -1.3 1.5 2.9 3.7 4.6 5.2
Agriculture 8,136 -5.4 5.4 0.0 2.8 7.4 -2.1 1.0 2.0 2.0 2.0
2.0Iniustry 27,897 9.2 8.5 3.2 2.2 -1.1 1.3 2.0 3.0 4.0 5.0
6.0Se-vices 23,814 11.3 3.1 -4.6 0.0 0.8 c/ -4.0 1.0 3.0 4.0 5.0
5.5
Coosumption 44,884 13.8 3.0 0.6 -1.7 0.5 -2.1 0.4 1.9 2.8 3.7
5.4Gross investment 24,155 -1.8 11.4 -6.4 -0.5 -1.3 0.0 -2.7 4.1
5.1 6.8 5.4Eg?nrts of GNFS 15,448 -0.2 12.7 10.4 0.5 -11.5 0.1 7.7
4.4 4.7 5.1 5.4Imyorts of GNFS 16,482 0.6 18.4 -8.6 -10.8 -15.3
-3.6 1.2 3.5 4.1 5.5 6.1
Gro-c national savings 23,209 -0.2 2.0 3.0 -6.0 -0.6 1.1 - - - -
-
PRI CE SGDP cleflator (1980 -100) 140 65 79 100 140 181 254 - -
- - _Exch6nge rate (Dinars per US$) 35.5 18.6 19.0 24.6 35.0 50.3
92.8 - - - -
Share of GDP at Market Prices (X) Average Annual Increase (1)(at
current prices) b/ (at constant prices)
1960 1970 1975 1980 1985 1990 1960-70 1970-75 1975-80 1980-85
1985-90
Gr3su Domestic Product a/ 100.0 100.0 100.0 100.0 100.0 100.0
5.9 6.5 4.1 0.8 5.0Agriculture 22.5 16.1 13.8 11.1 12.9 11.2 3.3
2.9 2.0 2.0 2.0Industry 42.2 37.4 44.3 40.5 40.9 41.9 6.3 8.3 7.5
0.1 5.5Services 29.0 38.1 33.1 35.8 36.2 36;9 6.9 4.7 4.9 -0.6
5.4
Consumption 67.2 72.8 74.3 68.3 65.9 65.3 6.5 6.9 6.3 0.3
4.8Gross investment 36.5 32.3 33.5 35.8 27.5 28.7 4.7 5.5 5.4 0.4
5.9Exports GNFS 13.9 18.5 20.2 20.6 31.5 32.2 10.2 6.7 5.2 -0.4
5.4ImpIorts GNFS 17.5 23.5 28.0 24.7 24.9 26.1 9.8 6.7 5.0 -5.5
6.0
Gr-ss national savings 32.6 29.6 25.6 32.3 33.1 33.7 5.3 6.2 3.2
- -
As I of GDP1960 1970 1975 1980 1981
PUBLIC FINANCETotal revenues 27.9 33.1 36.8 34.0 32.3Toial
expenditures 24.1 33.2 37.2 34.6 31.6Su-plus (+) or deficit (-)
+3.8 -0.1 -0.4 -0.6 +0.7
1960-70 1970-75 1975-80 1980-85 1985-90
OTHER INDICATORSGNI growth rate (Z) 6.1 6.7 6.0 0.2 5.3GNI' per
capita growth rate 5.0 5.8 5.1 -0.7 4.4
ICOR 5.4 4.6 5.6 53.7 5.7Import elasticity 1.6 1.0 1.2 -6.8
1.2
a/ At market prices; components are expressed at factor cost and
will not add up to total due to exclusion of net indirect taxes.b P
Projected years at constant 1972 prices.c / Etimate.
16671? EMENA IC
April 11, 1984
-
- 25 -
ANNEX IPage 5 of 6
Population: 22.7 million (mid-1982)GNP Per Capita: US$2,840
(1982)
YUGOSLAVIA - EXTERNAL TRADE
Amount Annual Growth Rates (Z)(million USS at (at constant
prices) d/
Indicator current prices) Actual Projected(1982) 1978 1979 1980
1981 1982 1983 e/ 1984 1985 1986 1987 1988
EXTERNAL TRADEMerchandise exports 9,923 1.4 1.6 11.0 4.3 -8.6
1.8 8.3 6.0 5.3 5.3 5.3
Primary a/ 1,816 3.3 -0.8 3.0 -19.5 -12.9 5.7 8.8 6.3 5.5 5.5
5.5Manufactures bi 8.107 0.8 2.4 13.5 11.0 -7.7 1.1 8.1 5.9 5.3 5.3
5.3
Merchandise Imports i2,810 -1.3 18.0 -10.5 -12.3 -10.0 -3.4 -1.9
3.6 4.7 5.9 6.6Food 714 -24.3 56.9 -7.8 -17.8 -8.2 -10.4 1.9 3.8
5.3 6.7 7.7Petroleum c/ 3,298 10.4 10.6 -3.1 -9.4 2.8 -2.0 1.4 2.0
3.2 3.9 4.2Machinery and equipment 2,968 -0.2 24.7 -19.3 -26.4
-14.8 -5.2 -2.0 3.8 5.0 6.3 7.1Others 5,830 -2.1 10.8 -7.9 -8.4
-13.7 -1.7 2.0 3.7 4.7 5.9 6.6
PRICES (1980 - 100)Export price index 117 73 84 100 109 117 113
116 126 137 149 163Import price index 112 70 83 100 110 112 111 116
124 135 148 160Terms of trade index 104.5 104.4 101.2 100.0 99.1
104.5 101.8 100.0 101.6 101.5 100.7 101.9
Composition of Merchandise Trade (Z) Average Annual Increase
(Z)(at current prices) (at constant prices)
1960 1970 1975 l980 1985 1990 1960-70 1970-75 1975-80 1980-85
1985-90
Exports 100.0 100.0 100.0 100.0 100.0 100.0 8.1 5.7 2.9 1.7
5.3Primary a/ 49.6 29.4 19.5 22.0 14.6 14.7 - -1.3 4.2 -4.1
5.5Manufactures b/ 50.4 70.6 80.5 78.0 85.4 85.3 - 8.1 2.3 2.6
5.3
Imports 100.0 100.0 100.0 100.0 100.0 100.0 9.0 7.4 4.0 -5.0
6.6Pood 9.1 7.2 5.5 7.2 4.7 5.0 - 5.0 8.7 -6.4 7.6Petroleu c/ 5.4
4.8 12.3 23.6 20.2 19.6 - 8.2 8.7 -0.7 4.0Machinery and equipment
36.8 33.2 33.9 28.0 27.9 28.4 - 9.4 1.8 -8.9 7.0Others 48.7 54.8
48.3 41.2 47.1 47.0 - 6.0 2.6 -4.0 6.6
Share of Trade with Share of Trade with Share of Trade with
Capital Share of Trade withIndustrial Countries (M) Developing
Countries (Z) Surplus Oil Exporters (Z) Centrally Planned Economies
(M)
1965 1970 1975 1981 1965 1970 1975 1981 1965 1970 1975 1981 1965
1970 1975 1981
DIRECTION OP TRADEExports 40.1 53.3 34.0 31.0 17.4 13.6 16.8
17.0 0.4 0.7 2.1 3.0 42.1 32.4 47.1 49.0
Primary 61.0 70.2 54.0 - 9.1 8.2 8.9 - 0.2 0.2 1.9 - 29.7 21.4
35.2 -Manufactures 24.0 41.9 26.0 - 23.8 17.2 20.0 - 0.6 1.0 2.1 -
51.6 39.9 51.9 -
Imports 55.3 66.1 47.5 50.1 16.0 12.7 15.7 15.3 0.1 0.1 0.6 9.1
28.6 21.1 24.6 28.1
a/ SITC 0-4b/ SITC 5-8c/ SITC 3; includes lubricants, coal and
electricity.d/ Projected years at constant 1972 prices; for
historical years,base year prices are those of the preceding
year../ Estimates.
1669HENEMA lCMarch 27, 1984
-
- 26 Annex IPage 6 of 6
YUGOSLAVIA - BALANCE OF PAYMENTS, EXTERNAL CAPITAL AND DEBT(US$
millions)
Po,lation: 22.7 million (mid-1982)GNP Per Capita: USi2,840
(1982)
I.locator Actual Projected1978 1979 1980 1981 1982 1983 */ 1984
1985 1986 1987 8
BALANGE OF PAYMENTSExports of goods and services 11,446 14,526
18,098 19,642 18,088 16,854 18,659 20,637 23,129 26,014 29,427
of which: Merchanaise f.o.b. 5,671 6,794 8,973 10,205 9,923
9,914 11,140 12,744 14,629 16,793 19,278Im.ports of goods and
services 12,702 18,187 20,389 20,588 18,712 16,580 18,103 19,767
21,675 24,311 27,555
of woich: Merchandise c.i.f. 9,988 14,019 15,064 14,528 12,810
12,154 12,979 14,414 16,456 18,992 22,058Nit transfers - - - - - -
- - - - -
Ct-rent account balance -1,256 -3,661 -2,291 -946 -624 274 556
870 1,455 1,703 1,872
Private direct investment - - - - - - - - - - -MIj loans (net)
1,719 1,346 1,924 548 -187 1,181 -241 209 -251 -779 916Ocher
capitsl b/ -204 1,173 499 636 -201 -1,510 -173 -540 -752 -557
-619Change in reserves -259 1,142 -132 -238 1,012 55 -456 -279 -321
-459 -1,945
international reserves c/ 3,245 1,968 2,567 2,687 1,675 1,622
2,156 2,434 2,756 3,215 5,159Of which: Gold (official valuation) 69
73 78 78 78 78 78 78 78 78 78
Reserves as months imports 3.1 1.3 1.5 1.6 1.1 1.2 1.4 1.5 1.5
1.6 2.2
EXTERNAL CAPITAL AND DEBTronss disbursements 3,057 3,891 4,596
3,107 2,314 3,660 3,316 3,206 3,914 4,005 4058
Official credits, public andpublicly guaranteed 369 519. 676.
712. 471. 1,136 1,816 602 479 475 458
Multilateral 180 318. 308 218 344. 340 552 436 446 453 454IBRD
180 294. 281 218. 330. 280 552 436 446 453 454
Bilateral 189 201 368 494. 128. 796 1,274 166 63 22 4Private
creditors and non-guaranteed 2,687 3,372 3,920 2,395 1,843 2,524
1,500 2,604 3,435 3,530 3,600
Yugoelav export credit (net) (-105) (-150) (-215) (-234) (-177)
(-157) (-200) (-260) -(129) (91) (-225)
External debtDebt outata.ning and
disbursed d/ 11,353 14,177 16,237 17,348 17,830 18,385 19,695
19,948 19,194 17,922 18,287Undisbursed debt 1,671 1,393 1,212 1,783
1,441 2,418 2,585 2,702 2,781 2,836 3,010
Debt service e/Total service payments 2,029 2,582 3,357 4,008
4,006 4,875 5,835 5,729 6,800 7,229 5,543
Interest f/ 495 821 1,281 1,987 2,049 2,155 2,197 2,376 2,102
1,951 1,851Payments as 2 exports 18 18 19 20 22 29 31 28 29 28
19
Average interest rate on new loans (2) g/ 6.1 7.5 15.0 12.5 14.5
10.8 10.8 10.8 10,9 10.9 11.0Average maturity of new loans (years)
16.8 14.9 8.9 11.7 9.6 7.4 8.0 7.9 7.4 7,4 7.1
a/ Estimates,2! Includes net use of IMF credit (drawings lags
repurchases), net use of short-term credit and changes in
bilateral
balances.r! Including gross foreign assets of commercial
banks.dt
External borrowing reported in the historical balance of
payments is not consistent with external debt data.e/ Debt service
excludes amortization and interest on export credit extended by
Yugoslavia.T After 1980, includes charges on use of IMF
resources.
Public and publicly guaraRteed debts only.
1 ibl9H
EVERA, 10April 12, 1984
-
- 27 -
AX, EX II-age I of 3
THE STATUS OF BANK GROUP OVERATIN1S IN Y 1OSLAVIA
As of March il, 1134
A. STATEMENT OF BANK LOANSUS$ millionAmount (less
Local Fiscal cancellations)Number Year Borrwer(s) Purpose Bank
Undisbursed
Forty-five Loans Fully Disbursed 1534.0
916 1973 Naftagas Gas Pipeline 59.4 4.61360 1977 Management
Organization Multipurpose:
"Metohija" Water 54.0 17.51469 1977 JUGEL and Six Electric
Power
Organizations in each Second Powereach Republic Transmission
80.0 2.8
1477 1978 Vojvodjanska Bank