The government of Serbia is moving to close four large state-owned banks that were associated with ousted former president, Slobodan Milosevic. The closures are part of an effort to reform the country's banking sector.
Closing four state-owned banks is the first step towards restructuring Serbia's debt-laden financial sector. The country's finance minister, Bozidar Djelic, says the closures are required under terms of a World Bank program to clean up Serbia's badly managed banking system.
The World Bank has followed the International Monetary Fund in beginning to make significant loans to Serbia. World Bank economists have warned of a banking crisis if corrupt, inefficient institutions are not quickly shut down.
Milko Stimac, the head of the G17 Plus Economics Institute in Belgrade, said the bank closures are overdue and should have occurred last year. "They were part of a system that sucked out the essence of the nation and transferred it to the accounts of a very few people around Milosevic," he said.
Former Yugoslav President Slobodan Milosevic was toppled from 12 years of power in Belgrade after a popular uprising and now awaits trial at the war crimes tribunal in The Hague.
The banks to be closed include Serbia's best known financial institutions, Beogradska Bank and Beobanka. In announcing Thursday that liquidation is underway, central bank governor Mljadan Dinkic said it would cost billions of dollars to make the four banks solvent and that no buyers - foreign or domestic - could be found.
Even though as many as 6,000 people will lose their jobs, economist Milko Stimac applauds the government's decision. He said he is impatient with the slow pace of reform. "This is only the beginning - 6,000 - out of a much larger number [of people who will lose their jobs]. And these people [at the banks] are highly educated. They know how to use computers. So it will not be hard for them to find a job. But to find a real job where they have to work, because a job like now where you can come to work and read the newspaper, because there is nothing to do, and you still receive some salary? I mean this is not a job," he said.
But there is genuine worry about the social implications of such large job losses. Serbian unemployment is already as high as 20 to 30 percent. Despite an end to U.N.-imposed sanctions and successful efforts to stabilize the economy, a small business sector has been slow to take hold. And there has been almost no foreign investment during the first year of Serbia's market-based reforms.