IMF launches fourth review of Bosnia’s EUR 390mn stand-by agreement

By bne IntelliNews September 5, 2013

An IMF mission launched this week the fourth review of Bosnia’s EUR 390mn stand-by loan agreement and its successful completion would provide the country with a tranche of some EUR 50mn, Bosnia’s Serb Republic finance ministry said.

The mission is led by Ron van Rooden and the fund resident representative in Bosnia, Ruben Atoyan, the ministry said in a statement. It was issued after the Sep 4 meeting between them and the Republic’s finance minister Zoran Tegeltija. The mission will spend two weeks in the Balkan country.

According to the statement, the Fund officials have concluded that the Republic has met all obligations stipulated in its letter of intent – both in terms of structural guidelines and quantitative criteria. The Republic is one of Bosnia’s two autonomous regions – the other one is the Federation, whose officials will hold talks with the IMF mission separately.

The Republic’s finance ministry also revealed plans to revise the 2013 budget, saying it presented these plans to the Fund together with its key policies for 2014. It, however, provided no further details.

The talks focused on the shrinking revenue from indirect taxes, concluding that the mission will pay more attention on the work of the indirect taxation authority.

The Serb Republic should receive BAM 32mn (EUR 16mn) once the new loan tranche is extended, the ministry said. The remaining two thirds of the amount will go to the Federation.  The completion of the fourth review will enable the disbursement of another BAM 94.1mn (EUR48mn).

The IMF approved the 24-month stand-by loan facility for Bosnia and Herzegovina in September 2012. Following the competition of the third review in June, the total amount disbursed so far to the Balkan state is EUR 194mn.

The program aims to help Bosnia cope with the effects of the deteriorating external environment and address structural weaknesses at home. The arrangement is seen as life-saving for the Bosnian economy, which is expected to expand by a mere 0.5% in 2013 after contracting 0.7% the year before.

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