BELGRADE, Yugoslavia -- The Yugoslav government Thursday temporarily banned state-operated banks from selling foreign currency to citizens except in special cases, and limited the amount Yugoslavs may carry abroad in German marks to about $700.
The order was forced by an unrelenting demand for foreign currency provoked by the nation's political crisis, said a statement issued after a session of the Cabinet of reformist Prime Minister Ante Markovic.
As a result, there has been a major drain of foreign cash from the problem-plagued, politically manipulated Yugoslav banking system, threatening the country's foreign exchange reserves, the statement said.
The reserves had been pegged at $9.5 billion in October, but this week were put at $8.2 billion.
'Noting that the political situation seriously endangers the banking system and erodes foreign currency reserves, the government has passed as temporary decisions ... regulations for easing the acute insolvency of banks and regulating the situation on the foreign currency market,' the statement said.
It said the cash crunch was also the result of free-wheeling speculative foreign currency transactions by state-owned enterprises and citizens.
'The government assessed, especially negatively, an ever-growing number of speculative foreign currency transactions on the part of some economic organizations and citizens, as well as the transfer aboard of national capital,' the statement said.
It said that until the requisite economic reforms are enacted next year, the federal government is prohibiting Yugoslavia's state-operated banks from selling foreign exchange to citizens 'except in exceptional cases,' which it did not define.
'At the same time, and also temporarily, it (the government) limited the transfer of foreign currency out of the country over the sum of 1, 000 German marks,' the statement said.
In another temporary step, the National Bank of Yugoslavia, the country's central bank, will sell foreign currency to banks that have to make payments on foreign credits, the statement said. Safeguarding Yugoslavia's foreign reserves is crucial to the success of sweeping economic reforms implemented by Markovic in January as part of a program aimed at transforming Yugoslavia from 45 years of communism into a Western-style free-market democracy.