Analysis 04 May 17

Soaring Debt Threatens Bosnia’s Liquidity

With the IMF program effectively blocked, Bosnia’s governments will have to turn to more commercial loans to cover their budgets – which come at a worryingly high price.

Drazen Simic
On April 20, Bosnian MPs failed to adopt a set of laws that would unlock a much-needed tranche of IMF money. Photo: Anadolu

Late last week the World Bank approved a new loan for Bosnia worth 56.6 million euros, aimed mainly at boosting the banking sector.

“Maintaining the stability of the financial sector is a fundamental condition for macro-fiscal stability, which in turn is a key prerequisite for economic growth,” the Bank said on April 28, citing the Bosnia and Montenegro country manager, Tatiana Proskuryakova.

“Through this project, the World Bank is providing both advisory and financial assistance to support the stability and development of the financial sector in Bosnia and Herzegovina, which will have broad benefits for citizens,” it added.

However, the banking sector is not Bosnia’s biggest economic problem, most experts warn.

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