Analysis 06 Jul 16

Bosnian Banks Lose Faith in Serb Entity’s Bonds

The lack of interest in buying Republika Sprska government stocks highlights growing doubts about the entity’s long-term financial survival.

Drazen Simic
BIRN

Bosnian state and entity budgets are eagerly awaiting a new financial injection from the

 Sarajevo. Photo by: wikicommons

International Monetary Fund, IMF, which the IMF board meeting is expected to approve in July.

The three-year program, worth 550 million euros, is needed to help stabilize a difficult financial situation in the country and support unpopular but inevitable economic and social reforms.

If the loan is approved, the first tranche should be paid over by the end of July. Officials in both entities say the money will arrive at the last moment to save the entity budgets, which are running on empty.

The funds are needed more than ever, having in mind that the two entities, the Federation of Bosnia and Herzegovina and Republika Srpska, cannot maintain their liquidity with long and medium-term borrowing for much longer in the way they have been doing for the past few years.

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