NEW YORK -- Yugoslavian officials Friday signed an agreement with roughly 600 of its commercial bank lenders for a $600 million loan and the rollover of $1.2 billion of its debt that falls due this year.
'We are delighted that we have established a basis on which Yugoslavia can move forward,' Harry Taylor, president of Manufacturers Hanover Trust which is head of the committee and agent bank, said at a signing ceremony. 'The (Yugoslavians) were tough but fair negotiators and we feel the agreement is realistic and faces up to their situation.'
Janko Smole, member of the Yugoslav executive council, noted that the agreement with the banks was part of a larger package with the International Monetary Fund and other governments and agencies that will give 'a big assistance to Yugoslavia's adjustment.' He said the agreement will lead to 'a more efficient economy -- greater export efficiency and increased productivity.'
Smole also said the agreement will help Yugoslavia to maintain economically and politically 'our non-aligned and independent position.'
Yugoslavia's roughly $19 billion in foreign debt makes it the 10th largest debtor in the world.
The agreement with the banks, which also calls for maintaining short-term trade credit lines at levels of mid-January, 1983, is part of a package of export credits and loans totaling an estimated $4 billion that Yugoslavia is negotiating or has received this year.
The 1983 assistance includes the International Monetary Fund ($600 million), World Bank ($270 million), Bank for International Settlements ($500 million), commercial banks ($1.2 billion) and 15 countries including the United States, ($1.35 billion). Smole said Yugoslavia has drawn two tranches of its IMF credit.
Asked about one banker's comment that only eight of the 15 industrial countries had signed the $1.35 billion loan, he said it was difficult to answer since each country was agreeing to different forms of aid. Another official said some of the loan was being backed by exports and gold. Yugoslavia had 1.86 million ounces of gold at the end of June, according to IMF figures.
By the end of 1983, Yugoslavia will have repaid about $3.5 billion of the $5.6 billion that fell due this year. It repaid roughly $4.32 billion in 1982.
Terms of both the new money and rollover signed with the banks call for a six-year stretchout with a three-year grace period. The $600 million loan and the rollover carry a rate of 1 percent over the London Interbank Offered Rate or 1 percent over the U.S. prime rate at the lender's option.
Yugoslavia is to impose a long-term stabilization program with about 70 austerity measures by the end of 1983. The program should be the basis of market economy rules that, along with Friday's bank agreement, will keep Yugoslavia in compliance with IMF conditions and help pull the country out of its economic crisis.
Among the country's goals are increasing industrial and agricultural production and labor productivity, and increasing exports to Western countries by 20 percent to get more hard currency.
Indeed obtaining foreign currency to increase its 'very low' reserves is a priority, Smole said. The export credits can be used by companies 'only when they export to an area with a convertible currency,' he said.