was a confederated union which existed between 2003 and 2006. The two republics initially formed the Federal Republic of Yugoslavia in 1992. The economy of Serbia and Montenegro entered a prolonged decline in 1989. Exacerbated by the economic embargo imposed during the Bosnian war, the Federal Republic of Yugoslavia economy's downward spiral showed no real sign of recovery until 1995. GDP was nowhere near its 1990 level, but the 1999 NATO bombing of Yugoslavia of the basic infrastructure of the country and many factories, as well as a renewed embargo, caused a further huge drop in GDP in relation to the 1991 level. The first sign of an economic recovery occurred in 2001 after the overthrow of Slobodan Milošević on 5 October 2000. A vigorous team of economic reformers worked to tame inflation and rationalize the Serbia and Montenegroeconomy. As of January 2005, GDP has recovered to 55-60% of its 1990 level, due to GDP growth of 8.5% in 2004.
Currency Problems
The FRY's monetary unit, the dinar, remained volatile throughout Milošević's rule. Alarmed FRY officials took several steps to tighten monetary policy in 1998, including ruling out a devaluation in the near term, increasing reserve requirements, and issuing bonds. During this period, Montenegro rejected the dinar and adopted the Deutsche Mark as its official currency. As 1999 began, the damage control operation had succeeded in returning the exchange rate to reasonable levels. However, it was not until 2002, after intense macroeconomic reform measures, that the dinar became convertible—a first since the Bretton Woods Agreements laid out the post-World War II international exchange rate regime.
Stabilization Efforts
efforts have not succeeded as well as macroeconomic reform. The process of privatization was not popular among workers of large socially owned companies, and many citizens appeared to believe the tendering process was overly centralized and controlled from Belgrade. Furthermore, international investment was lagging in Serbia and Montenegro, as a result of both domestic and international investment climates. Managers tended to blame the dearth of interest on the current negative business climate in Serbia and Montenegro.
Statistics
Gross Domestic Product
- $25.98 billion <, $27.5 Billion predicted for 2005 br> Real growth rate: 8.5%, 6.5% Real GDP Per capita - nominal: $2900, $3200 Composition by sector:
Total: $11.5 billion f.o.b. Commodities: machinery and transport equipment, fuels and lubricants, manufactured goods, chemicals, food and live animals, raw materials Partners: Russia 13%, Germany 13%, Italy 9%, China 5%, USA 4%
Debt
External: $12.6 billion -As a percentage of GDP: 55-60% Economic aid - recipient: $2 billion pledged in 2001
Currency
. Note - in Montenegro the euro is legal tender; in Kosovo both the euro and the Yugoslav dinar are legal Code: YUM Exchange rates: Serbian dinara per US dollar - official rate: 60 ; Fiscal year: calendar year
