Bosnia decides to start talks with IMF on new funding agreement.

By bne IntelliNews March 19, 2012
Bosnia's fiscal council decided last week to start talks with the IMF on a new stand-by loan agreement, the government said on its website. The decision was taken at the councils session headed by Bosnian Prime Minister Vjekoslav Bevanda. The council also adopted Bosnias 2012-2014 fiscal framework, which is a must condition for the country to restart negotiations on cheap financing from the IMF, the World Bank and the EU. The three-year framework is drawn at BAM 950mn (EUR 486mn), envisaging annual revenues of BAM 750mn in the period. The finance ministry would now, based on the agreed framework, prepare the structure of this years budget draft and send it to the government, the statement said. The IMFs resident representative to Bosnia, Milan Cuc, said at the beginning of March that the Fund is ready to discuss a new funding arrangement with Bosnia if the local authorities decide to ask for its help. He added Bosnia should prepare a clear joint economic strategy in order to have productive talks with the Fund. Bosnia signed a EUR 1.1bn stand-by deal with the IMF in July 2009 to mitigate the global crisis impact and support its fiscal spending. Yet, the country managed to withdraw only a third of the funds after failing to meet the conditions on the deal to gain access to the remainder. Moreover, Bosnia was left without a central government for more than 15 months after its October 2010 elections because its political leaders failed to reach a deal. As a result, Bosnia spent last year on temporary financing. A new cabinet was finally voted in office in February and adopted later last month a 2011 budget draft worth BAM 1.246bn. In February, EUs enlargement commissioner Stefan Fuele and high representative Catherine Ashton urged Bosnias new central government to adopt this years budget and the fiscal framework for the next two years in order to start benefiting from the EUs EUR 100mn macro-financial assistance. They added in a joint statement that a sound economic and fiscal policy is an essential prerequisite for Bosnia's EU integration process.
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