IMF postpones Bosnia loan tranche over lack of reform

By bne IntelliNews January 25, 2015

bne IntelliNews -

 

The International Monetary Fund (IMF) will delay the disbursement of a new loan tranche under its stand-by agreement with Bosnia because of lack of reform, according to a statement by Ruben Atoyan, the IMF resident representative in Bosnia, quoted by Indikator.ba news service. Atoyan also said that the IMF is planning a new mission to the country.

In September, the IMF had said that Bosnia needed more time to implement the policies agreed under its stand-by loan deal in order to receive approval for the next loan tranche. The Fund's mission pointed out that the policies Bosnia still needed to work on included measures aimed at reining in government spending that is not directly related to the floods; improving tax compliance and fighting tax fraud; strengthening financial sector stability and enhancing banking supervision.

In December, the IMF concluded its mission to Bosnia as part of the eighth review of the country's augmented €632mn stand-by loan deal, saying that the country’s economic outlook remains uncertain because of limited donor support. 

Bosnia and the IMF signed a 24-month €390mn stand-by agreement in September 2012 but extended it by nine months and augmented it by €153.1mn in January 2014 to meet additional financing needs. In June 2014 the IMF lifted the deal again by a further €95.7mn to help the country cope with the damage wreaked by the mid-May floods. After the two augmentations, the size of the deal reached €631.6mn, or 330% of Bosnia's IMF quota.

Also in June, the fund disbursed a €191.4mn installment to Bosnia, including the €95.7mn augmentation. The last tranche brought the total disbursements under the arrangement to €478.5mn.

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