Bosnia clears way to much needed loan deal with IMF

Bosnia clears way to much needed loan deal with IMF
By bne IntelliNews August 1, 2016

Bosnia & Herzegovina sent a properly signed letter of intent to the International Monetary Fund (IMF) on July 31, clearing its way to sign a new agreement with the fund, a statement on the website of the country’s smaller entity, Republika Srpska, said on August 1.

The new deal should help the governments the Federation and Republika Srpska to patch their budget gaps and will give them some stability in the next three years. Any further delay would have put at risk the fiscal stability of Bosnia’s two entities as they are relying on a fresh deal with the IMF. It could also lead to a delay in additional financing that was expected to be provided to the country by the EU and the World Bank after the agreement with the IMF is finalised.

In July, Bosnia missed the technical deadline to send the letter of intent as the prime minister of Bosnia’s bigger entity, the Muslim-Croat Federation, Fadil Novalic, and the head of the state-level government, Denis Zvizdic, declined to sign it until Republika Srpska finally agreed with the adaptation of the country’s Stabilisation and Association Agreement (SAA) with the EU and agreed on a mechanism for working coordination with the EU. On July 18, the country initialed the SAA adaptation.

At a meeting arranged by the head of the European Union delegation to Bosnia Lars-Gunnar Wigemark on July 31, the smaller entity finally agreed on the coordination mechanism, and the two prime ministers signed the letter of intent, which was sent to the IMF on the same day. Although the technical deadline for this move has expired on July 21, Bosnia had its last chance to actually get approval of the new deal by sending the letter by September.

“I must note that I am extremely satisfied with what was achieved. I think that today we have decided very important questions and I would congratulate all actors, because they have shown that they are true statesmen and that they have commitment to address the important issues in BiH,” daily Nezavisne Novine quoted Wigemark as saying following the meeting.

Another local media outlet, Capital.ba, quoted the chairman of Bosnia’s tripartite presidency Bakir Izetbegovic as saying that at the July 31 meeting the most sensitive issues had been resolved, which will also clear Bosnia’s way to get EU applicant status.

Bosnia formally applied for EU membership in February this year, but it has not been accepted so far due to the lack of agreement between Republika Srpska, on the one side, and the Fedaration and the state-level authorities, on the other. The country hopes to get an applicant status by mid-2017.

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