Structural Adjustment and Exchange Rate Policy in Yugoslavia

Postwar experience has indicated a propensity in many developing countries to pursue the policy of overvalued domestic currency. This has been widely recognised as one of the major developmental policy failures which has substantially contributed to distortions in economic structures, balance of payments problems and the debt crisis. Appropriate exchange-rate policies are, therefore, suggested and recognised as a necessary condition for improvements in the balance of payments and the relief of the debt problem. It is also recognised that appropriate exchange-rate policies will differ according to the character of sources and nature of disturbances in particular economies.