SARAJEVO (Bosnia and Herzegovina), March 24 (SeeNews) – The World Bank said on Friday its board of directors approved a 74.50 million euro ($80.5 million) loan to Bosnia and Herzegovina for the public finances development policy operation.
The programme will provide budget support to underpin policy efforts by Bosnian authorities to improve transparency of public finances and lower fiscal pressures over the medium-term, the bank said in a statement.
Bosnia and Herzegovina has one of the world’s largest public sectors relative to the size of its economy, with general government expenditures nearly 44% of GDP in 2016, and public enterprises adding even more to the public footprint in the economy.
The public finances development policy operation supports measures to reduce public spending by as much as 2.3% of GDP in the medium term and lays the groundwork for further structural reforms for a more effective public sector.
It is anchored in the Reform Agenda, a comprehensive structural transformation agenda that is supported by all Bosnian governments and by all development partners, including the European Commission, the International Monetary Fund, and the World Bank Group.
“The approved programme recognises the efforts of BiH authorities to make public spending more sustainable in the medium-term,” said Ellen Goldstein, World Bank director for the Western Balkans. “Tackling the legacy of an unwieldy and ineffective public sector is one of the most important aspects of the country’s Reform Agenda, which is designed to transform the economy in line with European Union criteria and to accelerate growth and job creation.”
Reform measures under the programme will reduce rigidities in the labour market and in pharmaceutical procurement, and pave the way for clearance of public sector arrears and deeper structural reforms in public financial management, health sector financing and delivery, and state-owned enterprise restructuring.
The World Bank approved a framework for Bosnia and Herzegovina in December 2015, which envisions around $750 million in new lending for the period 2016-2020, depending on the scope and pace of reform implementation.
The World Bank portfolio of active projects in Bosnia includes 11 operations totalling $497 million. Areas of support include transportation, employment, energy efficiency, local infrastructure, environment, forestry, water management.
($=0.9258 euro)