Council of Ministers of Bosnia and Herzegovina to discuss Blocked Money from IMF Today

June 2, 2020 11:45 AM

 

A session of the Council of Ministers of Bosnia and Herzegovina is scheduled for today, Avaz news portal reports.

On the agenda will be, among other things, the Draft Opinion on the Draft Law on the Election of Judges of the Constitutional Court of Bosnia and Herzegovina previously elected by the President of the European Court of Human Rights.

Also, on the agenda, there will be a proposal for a decision on the allocation of funds from the Rapid Financing Instrument (RFI) from the International Monetary Fund (IMF). This item was subsequently included in the agenda at the proposal of the Ministry of Finance and Treasury of BiH. It is about the amount of 641 million BAM.

In the middle of April, the funds based on the Rapid Finance Instrument arrangement of Bosnia and Herzegovina with the International Monetary Fund (IMF) have been transferred in the appropriate accounts with the Central Bank of Bosnia and Herzegovina (CBBH), in the total amount of SDR 265.2 million (around USD 361 million or around EUR 333 million).

In the beginning of this week, the IMF approved a loan from the so-called Rapid Finance Instrument for Bosnia and Herzegovina for purpose of coping with the coronavirus pandemic and mitigating its economic consequences.

Money from the arrangement with the International Monetary Fund in the amount of 330 million BAM is still blocked. The blockade has been going on for more than a month, Vijesti.ba news portal reports.

The Governor of the Central Bank of BiH, Senad Softic, told N1 that the conditions for the distribution of funds have not been met.

“Apart from the promissory note of the Ministry of Finance and Treasury of BiH, an additional document is needed for the distribution of funds, ie the Decision of the Council of Ministers, which means that not all preconditions for money distribution have been created yet,” said Softic.

This refutes the claims of the Chairman of the Council of Ministers of BiH, Zoran Tegeltija, that the Central Bank has everything that is needed to pay off the funds. Tegeltija also stated last week that the decision on the distribution of funds from the IMF was made and defined in the Letter of Intent.

”I do not see any need for a new decision to be made. This is an unnecessary story about the distribution of funds,” said Tegeltija. The SDA party then called on Tegeltija to send an official written explanation to the Central Bank of BiH, so that the funds could be paid out.

On 11 April, EU in BiH and U.S. Embassy in BiH hosted a meeting with political representatives to remove political blockages and focus their minds on dealing with the socio economic impact of the COVID-19 crisis. We thought we succeeded – but now that the 330 million Euro RFI sits idle in the Central Bank while citizens suffer, we see otherwise.

On 23 April the BiH Council of Ministers (CoM) issued a decision authorizing a promissory note that unlocked the transfer of the 330-million-Euro from the IMF to BiH. This same decision, however required a second special decision to allocate the funds in accordance with the Letter of Intent sent from BiH to the IMF. The CoM has yet to issue this second decision and the funds sit idle in the Central Bank. This is incomprehensible to BiH citizens, but also to international partners. The IMF agreement was with the two Entities and District, distribution of funds to Cantons is a decision made at the Entity level, and was accomplished when the Federation passed its budget rebalance.

The international community has reacted swiftly and decisively to provide medical support and designing programmes for economic support. The world economy faces a slump and so does BiH. The effects are being felt by countless citizens and businesses. BiH authorities must take decisive and timely actions to preserve jobs, offer social assistance to those affected the most, and to support economic growth and the development this country desperately needs. This includes agreement on using the 330-million-Euro in assistance from the IMF.

BiH politicians should immediately unblock the IMF funds so they can be used for the good of the citizens. The solution is simple, the CoM should issue the second decision authorizing the disbursement according to the agreement captured in the Memorandum of Understanding (MOU), without embellishment. Acting decisively now will send a sign to the outside world that BiH politicians are responsible partners to their citizens in dealing with the challenges the country will face.

 

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