SARAJEVO (Bosnia and Herzegovina), November 27 (SeeNews) – Bosnia and Herzegovina's government said it has adopted and sent to parliament for approval a modified bill on changes to the excise tax law - a move expected to unlock critical funding from the International Monetary Fund.
The modified bill has been agreed to by entity level finance ministries and their respective prime ministers, as well as by members of the state-level government, following a series of consultations and with the active support of the EU delegation in Sarajevo, the Council of Ministers said late on Friday.
The key change is that excise taxes will not increase, except on biofuels and bioliquids; instead, motorway toll tax will rise by 0.15 marka ($0.09/0.08 euro). This will secure the necessary funds for the construction of motorways and the construction and reconstruction of all other types of roads, the government noted.
Last week, the International Monetary Fund (IMF) said it is not releasing funds to Bosnia and Herzegovina until the country's parliament adopts a new law on excise taxes.
In September last year, the IMF approved a three-year 553.3 million euro loan ($648.2 million) to Bosnia to support the country's economic reform agenda. However, the IMF delayed the release of the second loan tranche in May, after the Bosnian authorities failed to meet the agreed reform targets.
Bosnia and Herzegovina is made up of two entities, the Federation and the Serb Republic. The country is hoping to restart the funding and investment cycle once the excise tax law amendments are adopted.
Since the IMF put its funding on hold, Bosnia's two entities have been struggling to stay liquid. In October, the Serb Republic concluded a loan deal with Serbia's Komercijalna banka, while the Federation has held several T-bill auctions in a bid to plug budget holes.