September 8 (SeeNews) - The International Monetary Fund (IMF) said on Thursday it has approved a three-year 553.3 million euro ($623.2 million) loan to Bosnia and Herzegovina to support the country’s economic reform agenda, that should help boost growth and support macroeconomic stability.
The Executive Board’s decision will enable an immediate disbursement of about 79.2 million euro, and the remainder will be available in 11 installments, subject to quarterly reviews, the IMF said in statement.
Following the Executive Board discussion, Tao Zhang, deputy managing director and acting chair, said that Bosnia's economic recovery has been on track after the global financial crisis, but that issues remain.
"Income convergence with advanced European countries has lagged and unemployment, especially among the youth, remains at very high levels. Important challenges remain in terms of improving the business climate, enhancing fiscal policy, and safeguarding financial sector stability," Zhang explained.
He noted that to reach faster growth and create more jobs, greater efforts will be needed to drive forward the structural reform agenda.
Moreover, reorienting the budgets to make fiscal policy more conducive to economic growth will be critical by reducing current spending to create room for much needed infrastructure investment.
“The authorities’ program supported under the Extended Fund Facility provides an important opportunity to address the challenges in a sustainable manner, while preserving macroeconomic and external stability. It will also enable financial support from other international partners,” Zhang concluded.
The IMF agreed already in May to lend Bosnia 550 million euro under a three-year programme that would require the country to cut public debt, improve business climate, and secure financial sector stability. However, delays were met after Bosnian politicians failed to fulfill the necessary requirements.
The programme was designed to replace a $720 million stand-by arrangement which expired in June 2015, after the lender froze the disbursement of new loan installments because the country had failed to implement needed reforms.
($=0.8879 euro)