IMF postpones fifth review under EUR 390mn loan deal with Bosnia after finance minister dismissal – IMF official

By bne IntelliNews January 13, 2014

The IMF postponed the approval of the fifth review under Bosnia’s EUR 390mn stand-by loan deal and the country’s request for extension and enlargement of the agreement due to the current political deadlock in the Federation, the fund’s resident representative in Sarajevo, Ruben Atoyan, was quoted as saying by Dnevni Avaz daily. The statement comes after the dismissal of the Federation’s finance minister, Ante Krajina, earlier this month threatened to hinder internal and external debt payments as well as other budgetary payments in Bosnia’s bigger entity as the latter cannot be made without his signature.

Atoyan noted that finance ministers at all levels (state and entities) have signed a letter of intent specifying their commitments under Bosnia’s stand-by deal with the IMF. A fully operational finance ministry is crucial for the implementation of the agreed policy agenda, he added. Furthermore, the Federation’s finance minister has an important role in several key institutions such as Bosnia's Fiscal Council and the Indirect Tax Authority, which also have an active role in the implementation of the IMF-supported program. Atoyan underscored the Fund will closely monitor the situation in the Federation and expressed hope that a quick solution will be found soon.

The IMF already postponed once its Executive Board meeting for January 22, 2014 after Bosnia’s state-level parliament failed to approve the 2014 budget by the IMF’s December 9 deadline due to a disagreement in the country's tripartite presidency. The IMF executive board was originally expected to approve the sixth tranche worth EUR 38mn under the 24-month loan deal on December 20, 2013. So far Bosnia’s track record under the current agreement with the fund has been good and the country has received EUR 237mn, or more than half of the funds provided under the stand-by deal.

The fund’s assistance will ensure most of the funding of Bosnia’s two entities and state institutions’ financial obligations this year which are expected to increase significantly due to rising debt servicing expenses.

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