Bosnia and Herzegovina to ask the IMF for a new, expanded Credit Arrangement

September 11, 2020 3:45 PM

The Governor of the Central Bank of Bosnia and Herzegovina (CBBH) Senad Softic told “Dnevni Avaz” on Thursday that negotiations on a new program with the International Monetary Fund (IMF) should begin in the second half of October.

Zoran Tegeltija, the chairman of the BiH Council of Ministers, after last week’s meeting with Prime Ministers Radovan Viskovic and Fadil Novalic, announced negotiations with the IMF, but did not specify details.

Softic, who is a member of the BiH Fiscal Council, told Avaz that, due to the current situation caused by the coronavirus pandemic, negotiations with the IMF will be online this time.

Our country will most likely ask the IMF for a new, expanded credit arrangement. This arrangement offers a higher loan amount, with a longer repayment period.

Earlier, BiH mostly demanded a stand-by arrangement with this international financial institution, more precisely in 1998 and until 2016, it entered into stand-by arrangements with the IMF, which usually last two years and three months.

The last arrangement with the IMF of BiH, ie its entities as end-users of funds, was signed on September 9, 2016. BiH was then approved 543.5 million euros.

But due to non-fulfillment of the undertaken reforms, all approved funds were never withdrawn, which is why the arrangement with the IMF was terminated in the sixth month of 2018.

The state and entity governments must determine the amount of the requested loan and the repayment period as early as next week.

It is unknown at this time what the amount will be. A meeting of the BiH Fiscal Council is also awaited, which will make decisions on the arrangement. Of course, the loan is accompanied by reforms, which we did not adhere to.

“I am certainly in favor of agreements on a new arrangement, but I am not in favor of taking on obligations lightly and terminating the arrangements later,” Vjekoslav Bevanda, the Minister of Finance of BiH, stated last week.

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