The Executive Board of Directors of the International Monetary Fund has finally approved a 39 million euros package for Bosnia-Herzegovina under the program supported by a 24-month standby arrangement.
This tranche of IMF loan will be distributed between both Bosnian entities, ensuring two-thirds to the Federation and one-third to Republika Srpska.
With this payment, the fiscal stability of Bosnia and Herzegovina and it’s both entities is expected to be ensured, which has been a major concern of politicians. The IMF Board of Directors approved this tranche after completing measures in accordance with a standby agreement with Bosnia’s state institutions. One such important measure was the adoption of the Law on favorable early retirement of war veterans that the FBIH Parliament adopted at the last session.
The IMF has urged the government to keep spending tight to ensure fiscal consolidation this year.
Although many analysts do not agree with government’s constant money borrowing, having in mind the recent global economic crisis, unfortunately this is the only way to plug budget gap. Many experts say Bosnia needs to focus on economy and attract foreign investments in order to overcome the emerging crisis.
So far, under the two-year arrangement, the IMF has paid around 156 million euros to Bosnia of a total 405 million euro loan it approved last September. Meanwhile, IMF has asked Bosnia to boost competitiveness and create jobs in order to unlock its growth potential.