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Sep 08, 2023 10:28 EEST
September 8 (SeeNews) - Bosnia and Herzegovina needs to step up efforts to strengthen macroeconomic stability and spur medium-term growth, given the continued high risks and uncertainty, the International Monetary Fund (IMF).
There is also need for greater political consensus and encouraged leveraging the EU candidacy to promote the necessary reforms, the IMF said on Thursday in a staff concluding statement following an Article IV mission.
Economic growth is projected to decelerate to 2% in 2023 from 3.9% in 2022, due to weaker domestic and external demand. Average inflation is projected to stand at 6% in 2023.
However, downside risks are high and include a possible abrupt slowdown in Europe, an intensification of domestic political tensions, and the materialisation of financial risks, the Fund said.
The IMF also advised the authorities to allow interest rates to rise in response to market conditions, while taking measures to preserve financial stability. The central bank should also further increase remuneration rates on bank reserves to narrow the interest rate gap with the euro area and reduce the risk of capital outflows, the statement read.
Furthermore, the IMF called for accelerating governance reforms and encouraged the authorities to urgently adopt a new anti-money laundering law and prioritise the implementation of the anti-corruption legal frameworks.
Regarding climate action, they suggested intensifying efforts to reduce carbon emissions in the economy, connecting the electricity market with the EU market, and shifting towards renewable energy sources.
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