What are the Conditions for the Second Tranche of the IMF?

October 4, 2017 8:30 AM

Resident Representative of the IMF in BiH Francisco Parodi said that BH authorities, besides increasing excise taxes on oil and petroleum products, also must adopt a new law on deposit insurance in banks in BiH and start with in-depth analysis/due diligence for BH Telecom and HT Mostar, with the aim to increase transparency and reduce fiscal risks.

“I do not want to talk about internal politics in the country. What I can say is that the authorities are investing great efforts to secure the fiscal space with the aim to start public investments and infrastructure on sustainable grounds, which will help to boost the growth, create new workplaces and improve competitiveness and connectivity in this country,” said Parodi.

Only a few months ago, the Prime Minister of the RS Zeljka Cvijanovic said that the RS does not need a loan from the IMF at all. On the other hand, the Prime Minister of the FBiH Fadil Novalic stated that roads can be built without the increase of excise taxes.

“I can talk about the project of the construction of motorways, which is included in the Single List of Priority Infrastructure Projects. The construction of highways in these plans is really large, complex and expensive. In order to start these most contemporary projects, public companies Autoceste and Autoputevi decided to get renowned international financial institutions involved, such as the EBRD, the EIB, and the IFC, which are not only helping with technical knowledge and experience, and ensuring transparency, but they also provide significant financial resources that this country does not have. As the international experience shows, borrowing under favorable interest rates and on a longer period of time makes sense in projects like this,” said Parodi.

When asked what are the other conditions for obtaining funds from the second tranche of the IMF loan, Parodi said that there are still three more measures.

“The first previous measure is related to the adoption of an increase in excise taxes, which would create a fiscal space for the construction of roads and highways. The second previous measure is the adoption of the new Law on Deposit Insurance in Banks in BiH, which will complete the set of laws for the modernization of financial sector. The remaining measure is to start the in-depth analysis / due diligence for BH Telecom and HT Mostar, with the aim to increase transparency and reduce fiscal risks. Moreover, it is crucial for the IMF to have good budgets. Since we are in the period of budget preparation of the Institutions of BiH and entities, besides the measures that the staff and authorities of IMF will jointly determine if / when the negotiating mission visits the country, it will be necessary to reach an agreement with the authorities on credible budgets for the year of 2018,” concluded Parodi.

(Source: Ervin Musinovic/Klix.ba)

 

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