Upper chamber of Bosnia’s parliament urgently adopts reforms to unlock IMF funds

Upper chamber of Bosnia’s parliament urgently adopts reforms to unlock IMF funds
By bne IntelliNews April 8, 2017

The upper chamber of Bosnia & Herzegovina’s parliament - the House of People - adopted a set of reforms required by the International Monetary Fund (IMF) in order to disburse a BAM155mn (€79.3mn) second loan tranche to the country at an urgent session on April 7.

The previous day the IMF said that completion of the first review of its agreement with Bosnia would be delayed significantly after state-level lawmakers from the lower chamber failed to adopt the legislative amendments.

To become legal, the reforms still need to be approved by the lower chamber – the House of Representatives. The two chambers have equal rights and no legislation can be passed without the approval of any both.

Before the parliament vote, the state-level government also held an extraordinary session on April 7, approving the same legislative amendments for the third time and asking the upper chamber to vote on them at an urgent session.

If the lower chamber fails to approve the changes before mid-April, Bosnia will not receive the second loan tranche earlier than September, local daily Nezavisne Novine reported.

In March, the IMF warned that the country risked losing its loan agreement if it failed to complete the set of reforms including changes to the excise tax regime. It gave Sarajevo until the middle of April to achieve this. In January, the fund put the arrangement on hold for the same reasons.

In September 2016, Bosnia and the IMF finally agreed on a new 36-month deal, supported by a SDR443.04mn (about €550mn) Extended Fund Facility (EFF). The country had been trying for almost a year to secure a new IMF deal after the previous arrangement expired in June 2015. The new deal was expected to help the governments of Bosnia’s two entities – the Muslim-Croat Federation and Republika Srpska – patch their budget gaps and give them some stability over the next three years.

Before that, the country lost the last two tranches from its previous deal with the fund, again because it failed to do the needed reforms.

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