news 28 Sep 12

IMF Approves €405 Million Standby for Bosnia

The IMF has approved a two-year stand-by arrangement of 405.3 million euro for the country - but it won't get all the money at once.

Elvira M. Jukic
BIRN
Sarajevo

The IMF loan, approved on September 26, is designed to support Bosnia's economic programme for the next two years, ease the effects of the “external environment and address domestic structural weaknesses”.

Bosnia's two autonomous entities will be using the cash from the loan but will not get the whole amount at once.

The IMF has enabled an initial disbursement of 60.8 million euro, saying that the rest of the money will be spread out over two years, after successful quarterly reviews.

“In recent months, Bosnia and Herzegovina’s economic recovery has been losing momentum and risks to the outlook have tilted to the downside,” Nemat Shafik, the IMF's Deputy Managing Director, said.

“The authorities’ commitment to continued fiscal prudence is welcome,” she added.

“Lasting improvements...can be achieved by reining in the wage bill, overhauling the pension system, and stepping up reforms of rights-based benefits and transfers,” she continued.

Two thirds of the money will be transferred to the largest entity, the mainly Bosniak [Muslim] and Croat Federation of Bosnia and Herzegovina, and one-third to the mainly Serbian entity, Republika Srpska.

The Council of Ministers, the state-level government responsible for the IMF talks, on Thursday said it had officially accepted the loan.

The government's economic program has four main objectives. These are improving policy coordination, reforms to safeguard medium-term fiscal sustainability, steps to safeguard the currency and improve the resilience of the financial sector and, finally, steps to ease private sector development.

Bosnia and Herzegovina joined the IMF on December 1992.

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