Bosnia must implement additional measures in order to meet its 2013 budget deficit target of 2% of GDP, the IMF said in a statement following a visit to Sarajevo in September 4-19 for the fourth review of the country’s EUR 390mn loan deal with the fund. In particular, the IMF urged for an improvement of the indirect tax collection, additional savings in the Serb Republic and the full implementation of the privileged pension law in the Federation.
The indirect tax collection has lagged behind so far this year, despite economic activity has been picking up, the IMF said. Lower than planned revenue, along with unbudgeted expenditures, have weakened the country's budget position. The IMF and Bosnian authorities are expected to finalize the details of the policies needed to meet the 2013 fiscal target in the coming weeks, the statement read.
The IMF expects the Bosnian economy to grow by close to 1% in 2013, following a 0.7% contraction in 2012, on the back of higher industrial output and exports. Growth will strengthen in the near-term as the European economy recovers. The fund warned that the unemployment rate remains particularly high and Bosnia has to improve its business climate, by making it easier to start and operate a business, in order to stimulate job creation.
The IMF welcomed the progress achieved by the Bosnian authorities in the implementation of the program supported by the stand-by loan deal and noted that all the end-June targets have been met.
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 completion of the fourth review will enable the disbursement of another EUR 48mn.
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