BELGRADE Yugoslav reformers urged food producers on Wednesday to cut prices of some staples to help ease the effects of the current political and economic changes on ordinary people.
In turn they were promised more state aid, including subsidies, to help the sector recover from years of losses under ousted president Slobodan Milosevic, who held down prices of bread, milk, meat and cooking oil to prevent social unrest.
"The food industry has kept social peace in Serbia in the past, but now that Serbia's government has liberalized prices ordinary people cannot afford them," said Mladjan Dinkic, an economist widely expected to be the new Central Bank governor.
"I want to ask you not to rush to compensate all the losses that you have incurred under the old regime in just one month under the new leadership," Dinkic told a meeting of food producers at the Serbian Chamber of Commerce.
He warned that if the companies refused to play ball the government would open the country to food imports.
Private bakeries quickly promised to cut prices, while state-run bread makers said they would respond later in the day.
Milk producers said they would also back the new authorities.
Prices of staples almost doubled last month in the run-up to presidential and parliamentary elections, pushing up the cost of a food basket for an average family of four by 20 percent, according to official statistics.
An 18-party bloc backing new President Vojislav Kostunica accused Milosevic's loyalists of hiking food prices in revenge for their election defeat.
Dinkic urged bakeries to cut the prices, saying food prices had risen by 100 percent since May while average wages rose by 31.7 percent and pensions by 14.8 percent in the same period.
He said the new authorities wanted to reform the entire economy from scratch, but would go slow on price liberalization in order to protect ordinary Serbs, with an estimated average monthly income of just 90 German marks ($40).
"We will allow gradual price increases. If you are fair with us now and support reforms, we will be fair with you.
If not, we'll open the market for imports," he said. Meanwhile the new Yugoslav government and the Central Bank would work to ensure full economic and monetary stability and make the Yugoslav dinar fully convertible by the end of the year, Dinkic said.
The National Bank of Yugoslavia made a deal last week with petrol retailer Beopetrol to sell diesel at 16 dinars per liter, while the price difference will be subsidized by the state.
Milk producers said they would be happy to lend support to a new economic program promising prosperity to the nation that suffered almost a decade of isolation and growing poverty.
"We expect 2000 milk output of around 400 million liters. This is 260 million liters less than in 1993. Our normal annual needs would be some 900 million liters 600 million for domestic consumption, 200 million for industrial use and 100 million for exports," said Bratislav Banjevac of Novosadska Mlekara Dairy.
He said the state needed to urgently repay 60 million dinars ($870,000) owed to the industry, but milk producers would agree to be paid in kind diesel, powdered milk, butter and cheese.
(Reuter)