Premier Branko Mikulic and his entire Cabinet resigned Friday, the state Tanjug news agency said. It was the first resignation by a federal government since the Communist Party came to power after World War II.
Mikulic, 60, and his government were faced with widespread public calls for their resignation because of the country's worsening economic crisis, which includes a 250 percent annual inflation rate, a $21 billion foreign debt and a 15 percent unemployment rate.Yugoslavia has registered a record number of strikes this year, with workers protesting low wages and declining living standards that now are comparable to the level of mid-1960s.
Inflation has soared since Mikulic took over as premier in 1986. He survived a potential vote of confidence last May, when deputies from the liberal northern republic of Slovenia and from Croatia failed to gather support from other four Yugoslav republics to vote out the government.
Tanjug said Mikulic's government will remain in power only until a new government is formed. He was scheduled to address the parliament in Belgrade later today.
Mikulic's reputation has also been dented by a corruption scandal involving hundreds of party and government officials in his native republic of Bosnia-Hercegovina.
The present government became unsettled Wednesday when parliamentary deputies voted against a government austerity law that would limit wages in hard-pressed public services like health and education.
The vote defied warnings from Mikulic of "Yugoslavia's obligations" to the International Monetary Fund.
Mikulic told the parliament session the IMF insisted on the austerity measures limiting public spending before agreeing last June to grant Yugoslavia a 1-year standby credit of $416 million.
The standby loan was crucial to help Yugoslavia meet payments on its foreign debt and reach separate agreements of loan rescheduling with other Western banks and governments.