Bosnia’s Federation parliament has to approve the entity’s 2014 budget draft by December 9 in order to receive the next tranche under the IMF’s EUR 390mn stand-by deal with Bosnia, the entity’s PM Nerman Niksic was quoted as saying by news service Klix.ba.

The IMF assistance will ensure most of the funding of the entity’s financial obligations next year which are expected to increase significantly due to rising debt servicing expenses.

The lower chamber of the Federation parliament, the House of Representatives, started discussions on the 2014 budget on Thursday, November 21. The Federation’s 2014 budget draft aims for BAM 2.36bn (EUR 1.2bn) in revenue, including income from borrowing, up 6.5% compared to this year’s plan, Niksic said while presenting the budget to the parliament.

The Federation typically plans balanced budgets, meaning equal size of revenue and spending – in this case BAM 2.36bn. The entity plans to borrow a record high BAM 655mn in 2014 mainly to service its public debt. Total external debt financing is projected to reach BAM 976mn, Niksic said, adding that this is mainly the result of borrowings back in 2010. Most of the funds will come from the IMF. The Federation also plans to issue short and long term debt papers on the domestic market.

Bosnia is currently negotiation an extension of its two-year stand-by arrangement with the IMF which is set to expire in September 2014.

The Federation, together with the Serb Republic makes up Bosnia.