Serbs inherit defunct state's IMF membership

Serbia will inherit membership of the International Monetary Fund and the World Bank after the break-up of its loose union with Montenegro, the Serbian central bank said yesterday.

"According to the Belgrade agreement and the Constitutional Charter of the state union, the member state which opts to leave the union cannot inherit the right to an international-legal status," the National Bank of Serbia said, in reference to the 2003 deal creating the state union of Serbia and Montenegro. Official preliminary results of Sunday's vote in Montenegro showed that 55.5 per cent of voters opted for independence, achieving the target majority set by the European Union for recognition of the result.

Membership of the IMF and the World Bank will transfer to Serbia as soon as Montenegro formally declares independence and Serbia will inherit the full quota of 467.7 million special drawing rights, the central bank said in a statement.

Montenegro will have to apply for its own membership. The central bank reassured external creditors of Serbia and Montenegro there was no need for concern, since the two have already determined who repays what to the Paris Club of sovereign lenders and the London Club of commercial creditors.

The Paris Club granted Serbia and Montenegro a phased, 66 per cent write-down on a $4.5 billion debt in November 2001.

"Serbia and Montenegro separately service these debts. Serbia repays 94.12 per cent and Montenegro 5.88 per cent," the bank said.

The central bank also said the authorities in Belgrade would continue work on determining the financial assets and liabilities of the Federal Republic of Yugoslavia, the state which was re-jigged into a loose state union in 2003.

Montenegrin officials expect talks on division of all assets and liabilities to end within three months, but allies of Serbian Prime Minister Vojislav Kostunica have indicated the process could drag out.

The Serbian central bank made no mention of deadlines.

"The cut-off date for the division of those assets is November 3, 1999 when Montenegro abandoned the monetary system of Serbia and Montenegro," it said.

Montenegro ditched the dinar currency in November 1999, unilaterally adopting the German mark and later the euro. Since 1999, the two have run their own central banks, separate monetary and economic policies and payments have been subject to international payment operations rules.