inancial operations beyond some outdated statistics on credits and
savings deposits. As the principal financial institution, the State Bank
carries out the financial policies of the Party and government. It
issues currency, provides credit to all economic sectors, accepts
savings deposits, and serves as the country's treasury. In addition to
these functions, the State Bank helps prepare the financial plans for
the economy, is called upon to assist enterprises in completing their
planned assignments, and is responsible for controlling all economic
activities through the use of its financial levers.

In mid-1969 the State Bank was severely criticized for poor performance,
particularly its failure to exercise adequate control over unauthorized
use of funds and waste of materials by the enterprises it helped to
finance. The bank's failure was largely precipitated by uncertainties
created through a decentralization of economic authority, decreed by the
Party, and a dilution of the bank's control function.

A specialized system of state savings and securities banks was
established within the Ministry of Finance in November 1968, for the
purpose of mobilizing the population's savings for investment through
loans to the state and the sale of its securities. The text of the law
that created this institution contained no provision concerning the
relation of these new savings and securities banks to the State Bank.
Further information on the new banks was not available in mid-1970.

The only available information on the State Bank's financial operations
consists of partial data on loans to agriculture and for housing and on
the number and amount of savings deposits. The total volume of farm
credits, exclusive of credits to state farms for which statistics have
not been published, increased from 95 million leks in 1960 to 252
million leks in 1964, including long-term loans of 38 million and 44
million leks, respectively. By 1967 long-term loans had increased to 56
million leks. The statistics do not indicate whether the published data
refer to the annual volume of loans granted or to the total amount of
outstanding loans. A small fraction of the loans after 1960 was granted
to individual peasants for the purchase of livestock.

Loans for housing construction and repair declined drastically from 17
million leks in 1960 to only 7 million leks in 1964. The distribution of
the loans between urban and rural areas fluctuated widely, bu