On December 20 the Executive Board of the IMF determined that the "Federal Republic of Yugoslavia has fulfilled the necessary conditions to succeed to the membership of the former Socialist Federal Republic of Yugoslavia in the IMF." (Yugoslavia was suspended from the IMF in 1992.) Its quota in the IMF will be SDR 467.7 million (about $604 million). With the accession of the Federal Republic of Yugoslavia, IMF membership now totals 183 countries. Under the IMF’s policy on emergency postconflict assistance, the Board also approved a loan of about $151 million in support of a program to stabilize the Yugoslav economy and help rebuild administrative capacities. About $130 million of the loan will be used to repay the bridge loans Yugoslavia received to eliminate its arrears with the IMF.

With membership in the IMF established, the Federal Republic of Yugoslavia (FRY) is now a step closer to membership in the World Bank. The next task is to resolve the $1.7 billion in IBRD debt that have accumulated since 1993, when the membership of the former Socialist Federal Republic of Yugoslavia was suspended.

Even before FRY’s membership, however, the Bank has embarked on a program of analytical and advisory services, which it hopes to expand through trust funds. Key is the Bank’s effort (in partnership with the European Union) to develop with the Yugoslav government a medium-term Economic Recovery and Transition Program Report. To this end, expert teams are in FRY this month to assess economic and structural reform priorities and investment and capacity building needs. The Economic Recovery and Transition Program Report is expected to be ready in April 2001. Shortly thereafter a Donor Pledging Conference could be organized (following up on a Coordination Meeting in December at which donors commited over $500 million for urgent needs).

Detailed membership discussions are now underway. Once FRY’s arrears are settled, the Bank will be able to provide new loans to help the country achieve a lasting economic recovery after more than a decade of turmoil.

Yugoslavia’s output, which has only partly recovered from the economic devastation caused by the Kosovo war, stands at about 40 percent of its 1989 level. About half of the workforce is unemployed, and the country’s infrastructure is in disrepair, following years of inadequate investment and the damage inflicted during the Kosovo war. About 900,000 refugees and internally displaced persons live in Yugoslavia under difficult conditions. The macroeconomic situation is very fragile, with the ratio of external debt to GDP having risen to about 140 percent in the absence of debt servicing.