Parliament voted Saturday to support the economically embattled government...


BELGRADE, Yugoslavia -- Parliament voted Saturday to support the economically embattled government of Prime Minister Branko Mikulic, paving the way for an International Monetary Fund agreement designed to boost the nation's fight against soaring inflation.

The Parliament's two chambers in separate debates and voting rejected calls to stage a confidence vote and approved Mikulic's report on economic reforms that was read at a joint session Saturday morning. The prime minister had rejected calls to resign under criticism for poor economic results.


Mikulic, 59, announced sweeping reforms that should remove 'defects' in Yugoslavia's communist system that he blamed for a serious economic crisis. The standard of living has dropped about 40 percent since 1980, according to Belgrade economists.

The 88-delegate Chamber of Republics and Provinces rejected a call for a vote of confidence with 64-23 tally out of the present 87 delegates; therefore, no actual confidence vote took place. Mikulic would have had to resign if defeated by a confidence vote.

Saturday evening, after a long and heated debate in the 220-delegate federal chamber, the delegates present in the session also decided not to stage a confidence vote by 125 votes to 64.

Mikulic, the first head of Yugoslavia's government to face a call for a confidence vote in the Parliament since the communists came to power in 1945, asked for assistance from political organizations and state-owned firms for his 'radical changes' that would introduce free market practices into the economy.


Admitting his Cabinet, since taking power in May 1986, had 'failures and wrong moves in certain questions,' Mikulic told a parliamentary session many 'federal decrees' had not been fully implemented by local government leaders in Yugoslavia's six republics and two provinces, all of which have different economic interests.

He rejected strong criticism of his Cabinet's work from regional governments in the Slovenia and Croatia republics, which called for the confidence vote. Mikulic said he would not resign but asked the delegates to decide on his Cabinet's fate.

Mikulic, submitting a report on his Cabinet's policy midway through its four-year term and its planned measures to pull multinational Yugoslavia out of an eight-year economic crisis, said poor effects of his policy to stabilize the economy were caused by 'various reasons, from objective material and other limitations to ideological and political obstacles and defects in the political and economic system.'

He told delegates the International Monetary Fund, instead of signing a standby arrangement May 13, was waiting to see the outcome of the confidence vote and on new inflation-curbing austerity measures worked out in agreement with the IMF.

The Belgrade government and the IMF were close to signing the one-year arrangement that would open the doors for restructuring large portions of Yugoslavia's $20 billion debt to Western governments and commercial banks, and receiving another $500 million in 'fresh' money.


A delay in obtaining a final approval by the IMF for financial support has forced Mikulic to postpone for about 10 days the initiation of his new package of economic measures.

Originally, the government planned to end 6-month-old price controls May 15, immediately introduce free market pricing for about 60 percent of products and services, lift import restrictions and create a free market for hard currency exchange. The austerity measures also included controls of public and personal consumption and salaries.

With the help of these measures, forecasters said the annual inflation rate for 1988 would be held at less than 95 percent. Yugoslavia's annual inflation was 76 percent in 1985 and climbed to 170 percent in 1987.

Mikulic said it would have reached 220 percent in December 1987 had his Cabinet not introduced the price controls Nov. 15. Despite these controls, the inflation rate in the past six months ranged from 6 percent to 8 percent a month.

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