IMF approves 59 mln euro disbursement to Bosnia

The nod was given following the completion of the first review of Bosnia’s economic performance under a program supported by a 24-month Stand-By Arrangement (SBA). The latest loan tranche is bringing total disbursements under the program to 117.9 million euro, the IMF said in statement on Wednesday.

The SBA with Bosnia and Herzegovina of total 392.9 million euro was approved on September 26, 2012.

IMF’s Executive Board also gave a waiver for non-observance of the end-September 2012 performance criterion on Bosnian Federation government's fiscal balance but it did not say what the deficit had been.

IMF's deputy managing director Minouche Shafik said in the statement that the Fund-supported program continues to provide a valuable anchor for Bosnia's economic policy amid a difficult external and domestic environment.

“The 2013 budgets strike a good balance between supporting growth and pursuing medium-term consolidation. By containing or reducing current spending, room has been created for increased social assistance and private sector support."

"Success in achieving sustainable fiscal consolidation over the medium term will depend on progress in structural fiscal reforms. Moving ahead with the reform of the privileged pension system in the Federation, and streamlining the government wage structure and the ministries and agencies in all of BiH will generate structural savings and create room for growth-enhancing capital investments and priority social spending."

Shafik also said that enhanced control over lower-level governments, extra-budgetary funds, and public companies, as well as steps to improve tax administration will help improve government finances.

According to the IMF, the country's prudent financial sector policies continue to promote financial stability but caution to any sign of stress in the financial sector is essential.

"Plans to enhance the monitoring of banks and improve crisis preparedness and review the resolution framework for non-performing loans are steps in the right direction. Close coordination and cooperation among the central bank, the banking supervision agencies and home-country supervisors, and the deposit insurance agency will be crucial.”.

($=0.7512 euro)