Eurasia Press & News
The International Monetary Fund (IMF) has approved a 1.57 billion dollar loan to Bosnia and Herzegovina that was stalled over the country’s failure to implement a series of economic measures.
The loan, which is intended to mitigate the effects of the global economic crisis on the small nation, was negotiated in May on condition that Bosnia comply with cost-cutting measures and impose monetary discipline.
But differences soon emerged between the two autonomous entities that make up Bosnia — the Muslim-Croat Federation and the Serb Republika Srpska. The Muslim-Croat part of the nation reneged on some of the cost-cutting imposed by the IMF, prompted in part by fierce criticism from war vetarans opposed to a planned 10 percent cut to their benefits.
The backtracking led to an IMF announcement in June that it would delay the loan until Bosnia agreed to implement its conditions. In a statement Wednesday, the IMF said the loan’s approval would make 282.37 million dollars available to Bosnia immediately, with the remainder available in installments subject to quarterly reviews.
The IMF said the loan “is designed to safeguard the currency board and cushion the effects of the deteriorating external environment, while adopting policies to redress fiscal imbalances and strengthen the financial sector.” The lending institution added that the money would position the Bosnian economy for “a strong recovery once the global economic environment improves.” Bosnian Finance Minister Dragan Vrankic said in June that support from the IMF and other financial institutions could rein in the country’s deficit from its current 8.0 percent to 4.0 or 4.5 percent of GDP by the end of the year.
The World Bank has said it would be willing to loan Bosnia almost 300 million dollars if the country implements the economic conditions attached to the IMF loan.
