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U.S. DEPARTMENT OF STATE
FYRO MACEDONIA: 1994 COUNTRY REPORT ON ECONOMIC POLICY AND TRADE PRACTICES
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS





          FORMER YUGOSLAV REPUBLIC OF MACEDONIA (FYROM)



    War in nearby Bosnia has severely hurt the FYROM economy
and complicated efforts at economic reform.  The FYROM has
suffered a breakdown of trade and capital flows, and lacks the
resources to shore up a weakened, inadequate infrastructure,
let alone to finance new east-west links that will be needed
for long-term development.  The Greek embargo, imposed in
February 1994, compounded the country's economic woes by
cutting access to the region's main port of Thessaloniki. 
There has been limited success in efforts to reroute trade
along existing east-west routes; nevertheless, significant
bottlenecks remain at the border crossings with Bulgaria.  The
Greek embargo, in particular, has hurt industrial
competitiveness by raising input costs, as overcrowded
alternate transport routes are far more costly than shipping
through Thessaloniki.

    Despite a harsh economic climate, the FYROM government put
into place a modest economic stabilization program in the
spring of 1992.  This program has received much praise from IMF
officials.  Inflation recently dropped to 2 percent per month. 
The average monthly salary was $126 by the end of 1993 -- less
than the cost of food for the average family, but still
considerably more than the average monthly salary in Serbia.  

    The U.S. contributed $5 million to a multilateral effort to
clear the FYROM's arrears with the World Bank in early 1994,
which in turn unlocked the country's first Economic Recovery
Loan from the Bank.  The June 1994 World Bank Consultative
Group meeting only partially succeeded in filling the projected
1994-1995 balance of payments gap of $110 million.  Progress on
this count is needed to enable the IMF and IBRD to move ahead
with their planned programs in 1995.

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