PREMIER SAYS YUGOSLAVIA WILL PAY ITS DEBTS
Yugoslavia, whose economic crisis is
under close scrutiny by foreign creditors, will not follow
Brazil by suspending repayments on its large foreign debt,
Prime Minister Branko Mikulic was quoted as saying.
    Mikulic was speaking to West German journalists in an
interview published yesterday by the Tanjug news agency.
    He said Yugoslavia had always paid its debts and would
continue to do so, but he said creditors and international
institutions should show more "understanding" for Yugoslavia's
situation.
    Mikulic said Yugoslavia had "understanding" for what Brazil
had done.
    Yugoslavia has almost 100 pct annual inflation, lagging
exports and low productivity. This month Makulic imposed
partial freezes on wages and prices which led to widespread
strikes. Tanjug said in the interview Mikulic warned the army
could be called in if Yugoslavia's political system was
threatened. Official reports show Yugoslavia ended 1986 with
hard currency debt of 19.7 billion dlrs. In 1986 it repaid a
record 5.97 billion in capital and interest, reducing its
overall debt by 996 mln dlrs.
    Government ministers told reporters last week they
regretted Yugoslavia made such an effort in 1986. They said the
cost to the economy had been too great.
    Earlier this month deputy prime minister Janos
Milosavljevic said Yugoslavia needed new credits. Foreign
Minister Raif Dizdarevic said in Caracas, "radical changes" in
interest rates and repayment times were needed.
    Western economists said Mikulic's remarks, taken with those
of his ministers, could be a signal some problems were seen
ahead in financing the debt repayments.
    Yugoslavia's debt refinancing timetable is to be considered
by the Paris club at the end of this month.
    The International Monetary Fund, which recently reviewed
the Yugoslav economy, is said by Western diplomats to be
alarmed at what it sees as a deteriorating economic crisis here
and the possibility of balance of payments problems later this
year.
    Mikulic visits West Germany next week, and debt is expected
to figure high on the agenda of his talks with Chancellor
Helmut Kohl.
 REUTER
