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Yugoslavia Table of Contents


Inflation and the Foreign Debt

Inflation continued to spiral during the 1980s. In 1987 it had reached 150 percent annually; by 1989, it reached 1950 percent. In the same period, foreign debt rose, unemployment remained high, living standards fell, and regional economic disparities widened.

In 1988 Yugoslavia had the highest per capita foreign debt in Europe, totaling over US$20 billion (see table 18, Appendix). In May 1988 the Yugoslav government signed an agreement with the IMF that provided new foreign loans and rescheduled the debt, in return for which the government agreed to cut inflation by carefully limiting expansion of domestic bank credits. This was the first attempt to use monetary policy to control Yugoslav inflation.

Data as of December 1990